Systems and methods for providing investment performeance data to investors

ABSTRACT

Systems and methods for generating a performance index are described. A rank score is generated for each investor relative to a group of investors of which the investor is a member. Generation of the rank score uses investment data of a portfolio of the investor, and the portfolio comprises at least one investment position. A set of investors is selected from the group of investors, and the selection is based on the rank score of each investor. The performance index is generated to provide a measure of performance of top individual investors over time relative to a market index. Generation of the performance index includes generating a composite portfolio comprising investment positions of each portfolio of each investor of the set of investors.

RELATED APPLICATIONS

This application is a continuation in part of United States (US) patentapplication Ser. Nos. 12/420,040 and 12/420,043, filed Apr. 7, 2009.

This application claims the benefit of U.S. Patent Application No.61/077,852, filed Jul. 2, 2008.

This application claims the benefit of U.S. Patent Application No.61/077,853, filed Jul. 2, 2008.

This application claims the benefit of U.S. Patent Application No.61/167,519, filed Apr. 7, 2009.

TECHNICAL FIELD

The disclosure herein relates generally to information systems. Inparticular, this disclosure relates to gathering and sharing investmentand trade data.

BACKGROUND

Currently, individual investor data and the actual performance ofindividual investor returns are not transparent. There also is noplatform that allows for the formal sharing ofactual/authenticated/verifiable individual investment information withothers. As a consequence, the entire $100 B investment advisory andportfolio management industry and $10 T mutual fund industry have preyedupon investor insecurity and confusion. The lack of a universalstandardized set of benchmarks for independent advisors, investmentmanagers, and mutual fund managers has resulted in billions of dollarsin wasted fees annually as individuals fail to meet basic returnmetrics. Coupled with the popping of the Internet investment bubble,corporate scandals, Wall Street analyst conflicts of interests, etc.many individuals no longer trust professional financial serviceproviders and instead rely on friends and family when making theirinvestment decisions.

Consumer research indicates that friends and family are the most trustedsource for investment information and that people by and large do nottrust professionals for advice. There are now more than 35 MM activeonline brokerage accounts and 40 MM American investors who do not relyon a financial advisor to make their important investment decisions.And, those who do so are becoming more and more involved in managingtheir advisors' decisions. With nearly 75% of mutual fundsunderperforming their respective indices after accounting for fees,individual investors would have been better off over the past twentyyears buying the stocks of the fund companies themselves rather thanconsuming their services. More, new research out of Harvard BusinessSchool suggests that the top decile of individual investors consistentlybeat the market by 4 basis points per day, or 10% annually. It is nowonder that the Annual Securities Industry Association Investor Surveyfound that nearly 70% of surveyed investors believe “financial advisorsand advisory firms put their own interests ahead of their clients.” Thissentiment has been steadily and consistently rising since 1999.

There is also strong empirical evidence that suggest that the collectivedecision-making of a group of individuals making guesses about a subjectthat can be quantified, often best “expert” sentiment. In the book “TheWisdom of Crowds” by James Surowiecki, the author provides many examplesthat support this theory. The famous example is the finding that theaverage of a collective of guesses of the number of jellybeans in a jarcomes very close to the actual number; a better guess than the singlebest guesses individually. As this relates to the stock market, Whartonprofessor J. Scott Armstrong wrote that he “could find no studies thatshowed an important advantage for expertise” over individuals. MarshallWace, a $10 B hedge fund based in the UK, has created a proprietarysystem, called TOPS, to take advantage of this reality. The firm hascreated a platform for 1,500 brokers around the world to send in theirbest investment ideas, which Marshall Wace then runs through itsproprietary algorithms. Marshall Wace has been one of the top performinghedge funds in the world over the past few years, relying on thesecollective ideas. Last, Internet startup PicksPal (www.pickspal.com), awebsite that allows its users to guess the outcome of sporting events,has uncovered a similar outperformance by a group of its top pickers.PicksPal's overall record against Las Vegas betting lines has been562−338, a win rate of 63%. In college basketball, the win rate is 66%.In pro football, the win rate is 62%. They are even getting a 52% winrate in pro hockey. In other words, the collective guesses of its topusers are besting betting markets.

Consequently, there is a need for a system that will eliminate theuncertainty and intimidation around personal investments by automatingand formalizing the current practice of shared peer investment advicewith actual, actionable, real-time data. Conventional systems used inthe investment business have not yet specifically addressed theseconsumer needs around investment data but there are a few similar andrelated technologies and services that have focused on aggregating dataprincipally for viewing.

For example, the Open Financial Exchange (OFX) Standard is aspecification for the electronic exchange of financial data betweenfinancial institutions, business and consumers via the Internet. Createdby CheckFree, Intuit and Microsoft in early 1997, Open FinancialExchange supports a wide range of financial activities includingconsumer and small business banking, consumer and small business billpayment, bill presentment, tax information, and investments tracking,including stocks, bonds, mutual funds, and 401(k) account details. OpenFinancial Exchange defines how financial services companies can exchangefinancial data over the Internet with the users of transactional Websites, thin clients and personal financial software. Open FinancialExchange streamlines the process financial institutions need to connectto multiple customer interfaces, processors and systems integrators. TheOpen Financial Exchange specification is publicly available forimplementation by any financial institution or vendor. As of March 2004OFX is supported by over 2,000 banks and brokerages as well as majorpayroll processing companies.

Other examples of conventional systems include Quicken and MicrosoftMoney. These systems are Personal Financial Management software thatallow users to download and view their financial information from avariety of accounts. For example, Quicken provides access toapproximately 2,900 participating financial institutions. Both Quickenand Money allow a user to enter in their username and passwords andautomatically download transaction and balance information from thoseaccounts. Further, many of these financial institutions allow users todownload “Web Connect” data directly from their sites to users' harddrives for importation later.

As yet another example of a conventional system, Yodlee providespersonalized consumer financial solutions to banks, brokerages, andportals. Operating predominantly as an Application Service Provider(ASP), Yodlee has integrated with, and provides services for AOL, Bankof America, Charles Schwab, Chase, Fidelity, Merrill Lynch, MSN, andWachovia. The Yodlee solutions are powered by a technology known asAccount Aggregation, which is built into the Yodlee Platform. ThisPlatform now powers financial service offerings for over 100 financialservice providers (FSPs) and their more than 6 million consumers,processing millions of account updates daily in a highly secure,scalable, reliable way.

These examples show that conventional systems used in the investmentbusiness have not yet specifically addressed consumer needs aroundinvestment data. Consequently, there is a need for a system that helpsthe now 90 MM and growing individual investors in the U.S. make better,smarter, and more efficient investment decisions with their $16 T ininvestable assets using the collective knowledge and actual performanceof their peers.

INCORPORATION BY REFERENCE

Each patent, patent application, and/or publication mentioned in thisspecification is herein incorporated by reference in its entirety to thesame extent as if each individual patent, patent application, and/orpublication was specifically and individually indicated to beincorporated by reference.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a block diagram of the investment data sharing system (IDSS),under an embodiment.

FIG. 2 is a flow diagram for rating securities using the IDSS, under anembodiment.

FIG. 3 is a block diagram of the aggregation component of the IDSScoupled to and/or including a normalizing component, under anembodiment.

FIG. 4 is a block diagram of the aggregation component of the IDSScoupled to a ranking component that outputs investor ranks, under anembodiment.

FIG. 5 is a flow diagram for ranking investors using the rankingcomponent, under an embodiment.

FIG. 6 is a table showing example simulation results for investment datausing Information Ratio ranking criterion versus Sharpe Ratio rankingcriterion, under an embodiment.

FIG. 7 is a flow diagram for ranking an investor, under an embodiment.The investor is one buying an investment position in the descriptionthat follows.

FIG. 8 is a flow diagram for generating a skill score using theInformation Ratio (IR), under an embodiment.

FIG. 9 is a flow diagram for generating a skill score using the SharpeRatio (SR) and Information Ratio (IR), under an alternative embodiment.

FIG. 10 is a flow diagram for generating a persistence score, under anembodiment.

FIG. 11 is a flow diagram for generating a confidence score, under anembodiment.

FIG. 12 is a flow diagram for generating a weighted average winpercentage, under an embodiment.

FIG. 13 is a flow diagram for generating a weighted average losspercentage, under an embodiment.

FIG. 14 is a block diagram of the rating component of the IDSSconfigured to provide or output security ratings, under an embodiment.

FIG. 15 is a flow diagram for rating equities using the rating componentoperating on rank data and real-time trade data, under an embodiment.

FIG. 16 is a strength of signal plot, under an embodiment.

FIG. 17 is a flow diagram for rating a plurality of investmentpositions, under an embodiment.

FIG. 18 is a table showing example investors and corresponding investorrankings generated by the ranking component, under an embodiment.

FIG. 19 is a table showing example stock ratings generating by therating component, under an embodiment.

FIG. 20 is a flow diagram for generating a skill score, and hence amutual fund/exchange-traded fund (ETF) rank score, under an embodiment.

FIG. 21 is a table showing example mutual fund/ETF ratings generating bythe rating component, under an embodiment.

FIG. 22 is a block diagram of the recommendation component of the IDSScoupled to produce security rankings and dispense portfolio informationor data, under an embodiment.

FIG. 23 is a block diagram of the investment data sharing system (IDSS),under an alternative embodiment.

FIG. 24 is a flow diagram for a method of generating a performanceindex, under an embodiment.

FIG. 25 is a flow diagram for investor matching using the IDSS, under anembodiment.

FIG. 26 is an example output of the mutual fund engine of therecommendation engine, under an embodiment.

FIG. 27 shows sample results of derived asset allocation models, derivedunder an embodiment, in view of results from major brokerage firms andmutual fund companies.

FIG. 28 is an example output showing the difference between a particularinvestor's current allocation and a desired target allocation, under anembodiment.

FIG. 29 is an example output showing application of the asset allocationtarget models to identify sector-level allocations for investors, underan embodiment.

FIG. 30 is an example output showing the Fit Score for a particularstock, under an embodiment.

FIG. 31 is a block diagram of the IDSS including a trading API, under anembodiment.

FIG. 32 is a flow diagram for transaction facilitation by the IDSS,under an embodiment.

DETAILED DESCRIPTION

Systems and methods are described below for gathering investmentinformation of peers and/or other trusted sources and making theinvestment information and analysis available on a real-time basis.These systems and methods, collectively referred to herein as theinvestment data sharing system (IDSS), are configured and function toprovide investment information and advisory services for individualmember-investors (referred to as members, user, or subscribers)generated through peer research, real-time portfolio and tradingsharing. The IDSS components are configured to consolidate individualmember account data from a variety of data sources and then allow thosemembers to share the aggregate data set for the purposes of providingreal-time information, insights, and investment recommendations to peersbased upon individual performance, real-time trading activity, andsummary member data. Specifically, members will be able to share currentholdings, positions that they are watching or thinking about buying orselling, and provide real-time or near real-time notifications of actualtransactions. Furthermore, the IDSS generates insights into individualmember portfolios based on the performance of other individualinvestors.

The IDSS include components configured to enable or support thecollection and sharing of actual investment information among variousindividual member-investors. The investment data includes data of anytype of investment vehicle used by the investor including but notlimited to data or information of public equities or securities,exchange-traded funds (ETFs), mutual funds, fixed income and optionsdata. In so doing, the IDSS aggregates investment data of members toform a data set that ties historical performance data of actualinvestors to real-time trade data. Aggregation of investment data, whichincludes data on what investments are being made and/or considered bymembers, includes pulling, fetching and/or receiving financial data fromthe members' brokerage accounts or other investment accounts and/orreceiving data entered directly by a member. The IDSS uses the aggregatedata to make inferences and conclusions on the overall market and thendirectly applies the inferences and conclusions to member portfolios.Thus, the IDSS creates asocial network around investment information sothat a member can gain access to investment data and performance ofother members to whom the member is linked. Further, the IDSS providesan automated portfolio management system or service for use in financialor investment services that uses the aggregate data to provide costeffective yet customized investment advice.

The IDSS uses data of members to provide transparency and insightsaround current holdings, asset allocation, historical performance, riskassessment, watch list, research and trading activity of the members.Top performers become “stars” under the IDSS by helping others simply byallowing others access to their investment data. Investment performanceis a unique data set because it is an objective metric; so-called“professionals” and “amateurs” can be judged on an even playing field.Once there is a community (the IDSS community) sharing this information,the aggregate data set is an incredibly powerful tool used to identifyboth high and low performing investors, which may likely exist in theclose personal network of members. The IDSS thus reduces or eliminatesthe uncertainty and intimidation around personal investments byautomating and formalizing the current practice of shared investmentadvice with actual, actionable, real-time data from peers.

In the following description, numerous specific details are introducedto provide a thorough understanding of, and enabling description for,embodiments of the IDSS. One skilled in the relevant art, however, willrecognize that these embodiments can be practiced without one or more ofthe specific details, or with other components, systems, etc. In otherinstances, well-known structures or operations are not shown, or are notdescribed in detail, to avoid obscuring aspects of the disclosedembodiments.

The following terms are intended to have the following general meaningsas they are used herein.

An “investor” is any party that makes an investment. An investor infinance includes the particular types of people and companies thatregularly purchase equity or debt securities for financial gain inexchange for funding an expanding company. An investor can purchase andhold assets in hopes of achieving capital gain, as a profession, and/orfor short-term income.

A “security exchange” or share market is a corporation or mutualorganization that provides facilities for stock brokers and traders, totrade company stocks and other securities. Stock exchanges also providefacilities for the issue and redemption of securities as well as otherfinancial instruments and capital events including the payment of incomeand dividends. The securities traded on a security exchange includeshares issued by companies, unit trusts and other pooled investmentproducts and bonds. Trading or transactions via a security exchange canbe via electronic networks and/or at a physical location.

A “market service” is a real-time, streaming quote and news service withdata direct from stock exchanges. Market service data allows a member towatch market movements in real time. Examples of data or informationavailable from a market service include, but are not limited to, thefollowing: stock and option quotes; futures, futures options, andfutures spreads quotes for international and domestic; international anddomestic futures quotes; single stock futures quotes; customizedwatchlists; graphical displays and/or statistics of trading trends;tickers; and news of business, technology, commodities, and finance.

The description and examples of the IDSS that follow reference“securities” as the investment vehicle. The use of a single type ofinvestment (“securities”) is only for purposes of simplicity indescribing the system, and it is understood that “securities” can bereplaced throughout the description herein with any type of investmentvehicle used by investors. More specifically, for example, theinvestment vehicles contemplated hereunder include public equities,exchange-traded funds (ETFs), mutual funds, and fixed income and optionsdata, to name a few, and can further include any other type ofinvestment vehicle not specifically described herein that is appropriateunder the description of the IDSS.

FIG. 1 is a block diagram of the investment data sharing system (IDSS)100, under an embodiment. The IDSS includes numerous components runningunder one or more processors. The IDSS components of an embodimentinclude an aggregation component or engine 102, a ranking component orengine 104, a rating component or engine 106, and a recommendationcomponent or engine 108. The IDSS includes couplings or connections tosources or components from which historical investment data 110 andreal-time market data 112 can be received, fetched, gathered, and/orinputted. The investment data 110 and real-time market data 112 can bereceived periodically or continuously in real-time or near real-time viasynchronization over electronic couplings with brokerages, marketservices, and/or other third-party sources of data. The IDSS is alsoconfigured to receive data or information 114 manually entered by amember.

The IDSS components 102-108 can be components of a single system,multiple systems, and/or geographically separate systems. The IDSScomponents 102-108 can also be subcomponents or subsystems of a singlesystem, multiple systems, and/or geographically separate systems. TheIDSS components 102-108 can be coupled to one or more other components(not shown) of a host system or a system coupled to the host system.

The IDSS components are configured and function, individually and/orcollectively, to provide data products or outputs 120 including investorrankings, security ratings, risk-adjusted portfolio performance, and/orbuy/sell recommendations, as described in detail below. The IDSS alsoincludes portals and/or couplings 130 by which members M1-MX (where X isany number) can access the data products relating to their individualaccounts or portfolios as well as the accounts or portfolios of membersto whom they are linked. The portals and/or couplings 130 of anembodiment include, for example, connections between a member's computerand the IDSS via a web site provided or hosted by the IDSS.

Member access to the IDSS 100 includes links to the accounts and/orportfolios of other members and, consequently, the establishment ofsocial networks 142-148 around investment information. Therefore, theIDSS components are configured to enable a member “invited” by a friendand/or family member (e.g., via electronic mail) to enter the IDSS andto establish a connection with the inviting member for the purposes ofsharing investment information. Members are then able to establish andmaintain connections with other peers within the IDSS for the purposesof sharing research, insights, portfolio investments, historicalreturns. The example shown includes four networks including: a firstnetwork 142 including linked members M1, M2 and M3; a second network 144including linked members M5 and M6; a third network 146 including linkedmembers M9, M10, M11, and M12; and a fourth network 148 including linkedmembers M7 and M8. The example shown also includes numerous members M4and M13-MX not linked to any other member. While particular networks areshown for purposes of this example, the embodiment is not limited toparticular numbers or sizes of networks.

Operations under the IDSS generally include the flow or transfer of datain real-time or near real-time from third-party sources, generation ofperformance feedback and customized recommendations, and theestablishment of a social network among member-investors that enablessharing of the data, performance feedback, and recommendations.Accordingly, the IDSS operations include the flow or transfer of data(e.g., historical investment data, real-time trade data, etc.) into thesystem, manipulations and calculations relating to the data, creating orestablishing social networks around investment information, generatingsecurity ratings, generating security recommendations, providing sharingof research and investment information that includes members or acollection of members “following” portfolios, providing real-timetrading notifications, and automatically performing trades based onsystem information, to name a few. Each of these operations is describedbelow; these operational descriptions are provided as examples only andare not intended to limit embodiments of IDSS to those described.

The IDSS of an embodiment includes and/or runs under and/or inassociation with a processing system. The processing system includes anycollection of processor-based devices or computing devices operatingtogether, or components of processing systems or devices, as is known inthe art. For example, the processing system can include one or more of aportable computer, portable communication device operating in acommunication network, and/or a network server. The portable computercan be any of a number and/or combination of devices selected from amongpersonal computers, cellular telephones, personal digital assistants,portable computing devices, and portable communication devices, but isnot so limited. The processing system can include components within alarger computer system.

The processing system of an embodiment includes at least one processorand at least one memory device or subsystem. The processing system canalso include or be coupled to at least one database. The term“processor” as generally used herein refers to any logic processingunit, such as one or more central processing unto (CPUs), digital signalprocessors (DSPs), application-specific integrated circuits (ASIC), etc.The processor and memory can be monolithically integrated onto a singlechip, distributed among a number of chips or components of the IDSS,and/or provided by some combination of algorithms. The IDSS methodsdescribed herein can be implemented in one or more of softwarealgorithm(s), programs, firmware, hardware, components, circuitry, inany combination.

The IDSS components can be located together or in separate locations.Communication paths couple the IDSS components and include any mediumfor communicating or transferring files among the components. Thecommunication paths include wireless connections, wired connections, andhybrid wireless/wired connections. The communication paths also includecouplings or connections to networks including local area networks(LANs), metropolitan area networks (MANs), wide area networks (WANs),proprietary networks, interoffice or backend networks, and the Internet.Furthermore, the communication paths include removable fixed mediumslike floppy disks, hard disk drives, and CD-ROM disks, as well as flashRAM, Universal Serial Bus (USB) connections, RS-232 connections,telephone lines, buses, and electronic mail messages.

The IDSS 100 of an embodiment includes a ranking component 104, asecurity rating component 106, and a recommendation component 108, asdescribed in detail herein. The basis thr the ranking, rating andrecommendation components or models of an embodiment is the fundamentalassumption that historical out-performance by certain individualinvestors will, on average, lead to corresponding out-performance in thefuture for some determined amount of time. For example, see Coval,Joshua D., David Hirshleifer, and Tyler Shumway, “CanIndividuallInvestors Beat the Market?” Harvard Business School WorkingPaper, No. 04-025, 2003). Thus, the “top” investors as designated by theIDSS, and based on a multitude of variables regarding past performance,current holdings, and real-time trading activity, will pick stocks that,on average, will outperform other investors, indices of non-activeinvestment strategies, and professional investment advisors for someperiod of time. And, conversely, historically poorer performingindividuals will select stocks that, on average, will under-performthese same benchmarks for another period of time. By also combining thisdata with publicly-available financial and trading information, the IDSSprovides a compelling proprietary quantitative investment model that canbe used to provide advice to anyone managing a portfolio.

Conventional rating systems rate stocks using a model based on somenumber of variables or criteria (e.g., related to earnings per share,market CAP, etc.), where the variables are all based on publiclyavailable data or metrics. Once rated, the stocks are ranked. Incontrast to these conventional systems, the IDSS rating component isbuilt on a ranking system which ranks members or individuals. The IDSSgenerally uses a ranking component to rank members based on theirhistorical investment performance, and then uses data of the ranking toidentify a segment or portion of the people whose past performance is agood predictor of future results. The IDSS of an embodiment uses theaggregated data to rank the members and, using the ranking, identify theappropriate segment of people to use as predictors. Subsequently, theIDSS uses data of the real-time trading activities of the predictormembers as a security rating system to rate securities for allparticipating members. Also, other parameters (e.g., earnings per share(EPS), price-to-earnings (P/E) ratio, stock price momentum, etc.) may beused along with the rank data to generate the security ratings. Therating system (e.g., ratings include A, B, C, D, and F ratings) is thenused to automatically monitor member portfolios.

FIG. 2 is a flow diagram for rating securities 200, under an embodiment.The components of the IDSS 100 (FIG. 1) are configured to ratesecurities by aggregating 202 investment data and real-time trade dataof numerous members. The investment data includes data of currentholdings, historical holdings, historical performance data, historicaltransactional data, and/or watch lists, to name a few. Morespecifically, for example, the investment data includes data orinformation of public equities, exchange-traded funds (ETFs), mutualfunds; fixed income and options data, but is not so limited and caninclude data of any type of investment vehicle used by the investor. Thereal-time trade data includes trade data of the members and publiclyavailable trade data of at least one stock market. The IDSS componentsrank 204 the members according to investment performance derived fromthe investment data. Ratings are generated 206 for securities held bythe members using the rankings along with the real-time trade data ofthe members. The IDSS compares the ratings with a member's currentholdings and specified or calculated risk level and, in response,generates recommendations for the securities held by the member inhis/her portfolio with the goal of providing abettor performing mix ofinvestments, while maintaining or lower the current risk level andpreserving the investor's asset allocation strategy. The recommendationsof an embodiment include a transaction recommendation and strength ofsignal indicator. The transaction recommendation includes a buy/sellrating for a corresponding stock, and the strength of signal indicatorindicates strength of the transaction recommendation.

The data aggregation of an embodiment operates on data entered by amember and/or data received at the IDSS via data pushing, pulling,and/or fetching operations from the member's brokerage accounts or otherinvestment accounts and/or receiving data entered directly by a member.For manual inputting of data by a member, the member can manually entera portion and/or all of the positions of his/her portfolio data into theIDSS via a member portal or access point.

The IDSS also supports automatic data transfer operations. For example,a user can enter the username and password to each financial institutionaccount (e.g., third-party brokerage account, etc.) that stores themember's online investment data; components of the IDSS will thenreceive the data from the third-party financial institution account viaone or more of data pushing, pulling, fetching and/or retrievingoperations. The data of an embodiment is automatically receivedaccording to programmable or selectable periods (e.g., hourly, twice aday, daily, weekly, etc.). Furthermore, the IDSS can import data from afile obtained from a third-party financial institution in response toactivation or selection of a “download” button (e.g., “Quicken WebConnect”). Regardless of the data entry mechanism used, the IDSScomponents automatically aggregate investment data and incorporate thedata into back-end databases with other individual investor data.

The data aggregation of an embodiment includes normalizing of datareceived at the IDSS. FIG. 3 is a block diagram of the aggregationcomponent 102 of the IDSS coupled to a normalizing component 302, underan embodiment. The normalizing component 302 is coupled to theaggregation component 102 or, alternatively, integrated as asub-component or sub-system of the aggregation component 102. The outputof the normalizing component includes normalized data 320.

Using the normalizing component 302, data aggregation of an embodimentincludes normalization of data aggregated from across multiple financialinstitution accounts. This normalization can include, but is not limitedto insertion of synthetic buy/sell transactions for balancing purposes,determining if a portfolio is complete and balanced, auto reconciliationof positions and transactions, security matching given symbol, Committeeon Uniform Security identification Procedures (CUSIP) number, or companyname, sector information, corporate action and short selling handling,and verification of position pricing information with several differenthistorical data sources.

The IDSS of an embodiment is configured to normalize aggregated data byreceiving investment data 110 (e.g., positions, transactions, cashbalances, etc.) from one or more third-party brokerages 310 or brokerageaccounts. The investment data 110 can be received via synchronizationover electronic couplings with brokerages, market services, and/or otherthird-party sources of data. The received data is matched 322 against aknown set of identifiers for each particular security. The matching 322includes taking a set of possible solutions and finding the firstsuccessful match using the security's CUSIP, symbol, or name. Becauseevery brokerage 310 may use a different description for broker actions,a determination is made as to how each brokerage 310 describes thecommon broker actions, for example, buy, sell, split, and dividend toname a few. Each transaction is then classified according to the brokeraction.

When the normalizing includes balancing 332, the IDSS of an embodimentis configured to balance 332 a portfolio by forming historical snapshotsof the portfolio using data of the received positions and transactions.The snapshots are historical versions of a member's holdings andtransactions at each transactional event. These snapshots includeholdings coming into the transaction, holdings going out of thetransaction, and a transactional event.

A determination is made as to whether any additional transactions arerequired in order to match 332 the current portfolio state or holding tothe portfolio state indicated by the transactional history. If thetransactional history totals to more holdings than the current portfolioholdings, the normalizing component 302 generates or creates a syntheticsell transaction to reduce the holdings; the synthetic sell transactioninvolves a number and/or type of stocks by which the transactionshistory exceeds the current holdings. If the transactional historytotals to fewer holdings than the current portfolio holdings, thenormalizing component 302 generates or creates a synthetic buytransaction to increase the holdings; the synthetic buy transactioninvolves a number and/or type of stocks by which the transactionshistory is deficient relative to the current holdings.

When the normalizing of an embodiment includes automatic reconciliationof positions and transactions, the IDSS is configured to locate aparticular security. If the particular security is not located itremains in a “not found” state in the aggregate investment data. Whenlocated, the price, activity date, and action of the security iscompared against all other transactions known for this member. If noother similar transactions are found for this member, the transaction isreconciled; otherwise, the transaction is marked as a possible duplicatetransaction.

The IDSS uses aggregated data of investors to rank the investors. FIG. 4is a block diagram of the aggregation component 102 of the IDSS coupledto a ranking component 104 that outputs investor ranks 402, under anembodiment. The input to the ranking component 104 includes normalizeddata as described above, but is not limited to normalized data.

FIG. 5 is a flow diagram for ranking investors 500 using the rankingcomponent 104, under an embodiment. Components of the IDSS are generallyconfigured and function to aggregate 502 investment data and real-timetrade data of the investors, as described above. A base score isgenerated 504 for each investor using the investment data. Theinvestment data is received from third-party sources 310 and/or entered114 by the member, as described above. An adjusted score is generated506 for each investor by adjusting the base score according to anattribute or weighting parameter. The attribute can include, forexample, tenure of the investment data, verification state of theinvestment data, and/or popularity of the investor to name a few. TheIDSS ranks investors 508 by assigning each investor to a rank groupaccording to the adjusted score of the investor. The ranking isdescribed in detail below.

The IDSS ranks individual members based on a variety of attributes,including actual historical and current portfolio data. The rankingattributes might include data of watch lists but is not so limited. Thesecurity rating and recommendation engine operations are based on theserankings as detailed below. The ranking component generally ranksindividual investors into different tiers, and the tiers are defined bydifferent percentiles where the highest tier (e.g., Elite rank or tier)comprises the top investors in the IDSS community. The other tiers belowthe highest tier follow the same principle with the last tier comprisingthe lowest performing investors. The ranking is derived primarily fromrisk adjusted performance which is a measure of investor performancewith the volatility attributable to different risk profiles removed andexposing the skill in picking different investments. Investors with ahigh risk adjusted performance are rated higher than those with a lowrisk adjusted performance.

The IDSS receives investment data of a large number of members, and theinvestment data includes actual historical portfolio data, currentholdings, watch lists, and/or real-time trading information for example.The investment data can include other types of historical performancedata of the members. This investment data is received into the IDSS froma variety of sources: online brokerage accounts, portfolio managementwebsites, personal software of a member (e.g., Quicken, etc.), as wellas manual entry. The investment data is received via importation,fetching, and/or retrieving, for example, or via other techniques knownin the art for transferring data. The investment data received can spanlong periods of time and, in some cases, can go as far back as eight (8)years, depending on the data tenure of the online brokerages.

This disparate individual historical performance data in the systemprovides insight into the past and current universal distribution curveof “high” (strong) and “low” (poor) performing individual investors.Investors that have consistently experienced significant historicalreturns and outperformed indices and benchmarks are ranked higher thanthose with minimal or negative returns. For the first time, the IDSSenables individual investors to see where they stand as far as theirinvestment performance relative to some number of their peers, and thetop individual investors in the IDSS community can be recognized.

The ranking operations begin when a user imports his/her investment datafrom one or more brokerage accounts (e.g., Charles Schwab, Fidelity,eTrade, etc.) via an electronic coupling between the brokerage accountand the IDSS. The IDSS aggregates the investment data received andinitiates or performs a series of calculations. The data aggregationenables matching of investors as described herein, where the matchingincludes identifying other investors with portfolios having a similarstructure to a member yet are realizing better performance than themember's portfolio.

The IDSS is configured to take the investment data and constructnumerous distinct views of information. For example, the IDSS of anembodiment generates a first view that is personal to the member(personal view), a second view that is shared with a network (networkview), and a third view that is shared with the general public (publicview). The information views can be accessed via the IDSS web site. Forthe member specifically, the IDSS automatically calculates individualportfolio returns and performance for various time periods. The returnsand performance are calculated, for example, for a current period (e.g.,current day, time period of the current day, etc.) and/or during ahistorical period (e.g., daily for the last 180 days, daily for the lastmonth, daily for the last quarter, daily for the last year, monthly forthe last year, monthly for the last five (5) years, average annualreturn for the last year, average annual return for the last two (2)years, etc.).

The calculations performed by the IDSS of an embodiment include one ormore of time or money weighted performance, current and historicalportfolio risk, Sharpe ratio, portfolio dollar values (including cashbalances), verification level of the “quality” of the data, number oftrades/year, average hold time of an asset, average cost basis, holdingspercentages and asset allocation, and tenure of data. These calculationsappear on the member's area of a portal or electronic site (e.g.,“members home page” of the IDSS web site) and are easily accessiblethroughout the IDSS. These calculations form the basis for a memberstatistics or “stats” area, which provides or preserves a historicalrecord of a member's investment activity, similar to the statistics fora baseball player on the back of a baseball card. This is of immensevalue to a member since the majority of online brokerage firms onlypreserve a certain window of data and then it becomes inaccessible tothe user as well as providing a consolidated view of the statistics fora member's entire holdings across various investment accounts held atdifferent financial institutions.

The ranking component 104 of an embodiment is configured to perform aweighting of members using results of the calculations and data ofnumerous weighting parameters or member attributes as described above.The parameters include the risk-adjusted performance of each member. Therisk-adjusted performance is generated from data of historicalperformance and risk.

The parameters also include the tenure of data. The tenure of data isthe amount or length of transactional history available for a member. Ifa member has three years of transactional history stored within thesystem, the tenure of her account is three years, for example. The datatenure of an embodiment can be any period of time (e.g., 1-months data,2 years of data, etc.).

The parameters additionally include validity of data. Each member has averification level assigned to him/her based on the amount of thatmember's data that is manually created or entered by the member (e.g.,not verifiable) and the amount of that member's data received via anelectronic link or coupling with a brokerage (e.g. verifiable).

The ranking system weighting parameters can also include memberpopularity. The popularity attribute quantities or weights each memberby the quality of investors to which that member is linked on theplatform. Members can follow other members, and when many other membersare linked to a particular member (e.g., has many followers) this is aquantifiable measure of popularity. When considering a member's“popularity” the quality of the member's followers is also considered,and highly rated followers score higher than lowly rated followers.

The parameters for weighting of members further include momentum. Themomentum attribute represents, for example, performance above apre-specified threshold during a pre-specified period of time (e.g., 3months, 6 months, etc.). The most recent performance trend (e.g., upwardtrend, downward trend, plateau) of the member's portfolio is thereforerepresented in the overall ranking as members can change theirinvestment strategy at any point and the “current” strategy is moreimportant to the IDSS member-investor community as it will becontrolling the future performance of the investor.

The weighting parameters used in the ranking of members can includevarious other variables. The other variables can include number oftrades per year by a member, average hold time of an investment, andsector weighting to name a few.

Using the weighting parameters described above, the IDSS “ranks” eachmember in order to compare him/her against other members, individuals,and benchmarks. In ranking each member, the ranking component 104calculates or generates each member's five (5) year Sharpe Ratio, andthis Sharpe Ratio forms abuse score. While the ranking component 104 ofan embodiment uses the Sharpe Ratio to form the base score, theembodiment is not so limited, and alternative embodiments can use otheravailable techniques to generate the base score.

The ranking component 104 adjusts the base score according to one ormore criteria. The ranking component 104 of an embodiment adjusts thebase score according to the data tenure. For example, the base scoreremains unadjusted for a data tenure approximately equal to five (5) ormore years, while the base score is adjusted down to a value of zero (0)for a data tenure of zero (0) or an absence of tenure data. Theadjustments are performed by multiplying the input base score by afactor representative of the data tenure. For example, a data tenure ofapproximately three (3) years results in multiplication of the basescore by a factor of 60% (three (3) years is 0.60 or 60% of five (5)years), for an effective reduction in the base score of approximately40%. The adjustments for data tenure however are not limited to linearadjustments or multiplication operations.

The ranking component 104 also adjusts the base score according to datavalidity or verification. For example, the input base score, whetherunadjusted or previously adjusted, is not adjusted for a fully verifiedaccount, but is adjusted down (e.g., reduced 50%, reduced 30%, etc.) foran unverified account. The adjustments for data validity are not limitedto linear adjustments or multiplication operations.

The ranking component 104 can also adjust the base score according tomember popularity. For example, the input base score, whether unadjustedor previously adjusted, is not adjusted for a contact and followernetwork larger than a pre-specified popularity threshold. However, theinput base score can be adjusted down (e.g., reduced 25%) for an emptynetwork with no linked members. For example, a network of a particularmember that includes a number of members approximately equal to 80% ofthe popularity threshold value results in an effective reduction in thebase score of approximately 10%. The adjustments for member popularityare not limited to linear adjustments or multiplication operations.

The ranking component 104 of an embodiment categorizes and qualifiesindividual investors based upon real historical and real-time brokerageaccount data. The opportunity is to develop either a long or shortinvestment strategy that can be used as the basis for an investmentrecommendation. Several criteria are considered, including historicalperformance, real-time trading activity and holding decisions, sectorinflows and outflows, risk, and diversification (amongst others) to formthe basis of the system. The system can then confidently andpredictively identify, skillful and not-so-skillful investors from apool of retail investors that have a high potential to continue torealize positive or negative returns for some period into the future.

Previously, it has been assumed that investors with historically highSharpe Ratios (i.e., risk adjusted excess return) over some time periodwill continue to have high Sharpe Ratios in the future. However, themere presence of a high Sharpe Ratio does not guarantee that anindividual has a proven, and replicable, ability in either portfolioconstruction or stock selection, or market timing. Rather, it reveals acombination of skill (alpha), leverage (beta) and luck. It is thiscombination of alpha, beta and luck that comprises the realized SharpeRatio. There is no promise of persistence. Therefore, using Sharpe Ratioto rank investors might be like saying, “I am willing to bet my money oninvestors that got the most return for a given amount of risk—regardlessof how they got there—i.e., I don't care if they were skillfulinvestors, or leveraged the market in an up market, or were just lucky”.

This is a poor bet, simply because out of a pool of investors with highrealized Sharpe Ratios, the only ones that are expected to do well inthe future are those that have skill—alpha. Investors with high betascores will likely continue to outperform in bull markets and,conversely, will be expected to underperform in bear markets. Investorsthat were just lucky may or may not continue to outperform in thefuture—it is more likely the case that he/she will not outperform.

A predictive ranking algorithm like the ranking component of anembodiment, therefore, identifies skillful investors and filters outinvestors with high betas and investors that have simply been lucky. Thefirst filter should ideally make the skilled investor pool market of anembodiment neutral and the second filter should remove randomness fromthat skilled investor pool.

The IDSS, through the ranking component, identifies skilled (notleveraged) investors who win most of the time (persistent) and win big(win big lose small, confident in their choices). The ranking componentof an embodiment functions to identify the skilled investors who arepersistent and confident, as described in detail below.

The ranking component functions to remove investors that achieved highreturns because of leverage through the use of the Information Ratio(IR) as a ranking criterion. Similar to the Sharpe Ratio, theInformation Ratio measures risk adjusted active return. The activereturn is return (alpha) over a benchmark (e.g., S&P 500). The IR isused in the IDSS of an embodiment instead of the Sharpe Ratio and, in analternative embodiment of the IDSS the IR is used along with the SharpeRatio.

Simulations were run with 16 different ranking algorithms on half of thedataset (to avoid statistical over-fitting of data) by varying theranking and following times. In each case, two simulations were run—oneusing Sharpe Ratio as the ranking criterion and the other using theInformation Ratio. In addition to ranking investors over a fixed timeperiod (2 years, 3 years, etc.) the concept of a blended rankingalgorithm was introduced that takes into account ranking over multipletime scales (for example, 40% of the rank comes from a 2 yearSharpe/Information Ratio, 30% comes from a 1 year Sharpe/InformationRatio, 20% from a 6 month Sharpe/Information Ratio and 10% from a 3month Sharpe/Information Ratio. It was found that most such blendedranking algorithms were inferior to ranking algorithms based on a singletime scale—however it should be noted that the shortest time period usedin the static ranking algorithms is 2 years, while the shortest timeperiod used for the blended ranking algorithm is 3 months.

These simulations showed that the Information Ratio based strategiesoutperform Sharpe Ratio-only strategies in approximately 70% of thecases. Furthermore, in cases when the IR strategy underperforms, theaverage underperformance is −2.64% (range −0.39% to −7.7%) while theaverage outperformance is 7.46% (range 0.22% to 28.17%).

Additionally, the ranking component or algorithm of an embodiment basedon or considering IR follows the desired/intuitive trend where the top1% population out performs the top 5% population which outperforms thetop 10% population, and so on. While this trend was robust up to 2007even when using a SR strategy, it was reversed in 2008 with the SRstrategy, where the top 1% investors underperformed the top 10% by ˜3%.The results for this case are summarized in the table shown in FIG. 6.The Ranking algorithm used looks at Sharpe/Information ratio based on 2years of performance and follows the top x % investors for a period of 4months.

FIG. 7 is a flow diagram for ranking an investor 700, under anembodiment. The investor is one buying an investment position in thedescription that follows. The investor ranking of an embodimentcomprises generating a skill score 702 for each investor of a pluralityof investors. The skill score of an embodiment represents an InformationRatio (IR) of the investor, as described below with reference to FIG. 8.The skill score of an alternative embodiment represents a combination ofan IR and a Sharpe Ratio (SR) of the investor, as described below withreference to FIG. 9.

The investor ranking of an embodiment further comprises generating apersistence score 704 for each investor of the plurality of investors.The persistence score represents skill of the investor relative to abenchmark. The investor ranking of an embodiment comprises generating aconfidence score 706 for each investor of the plurality of investors.The confidence score represents an investment win percentage relative toan investment loss percentage. The investor ranking of an embodimentcomprises generating a rank score for each investor of the plurality ofinvestors by combining the skill score, the persistence score and theconfidence score. The rank score categorizes the investor relative toother investors based upon historical investment data and real-timebrokerage account data.

The objective of the skill score is to come up with a numeric scorebetween 0 and 100 for each investor. The skill score of an embodimenttakes into account the IR and investing tenure of each investor.Generally, skill score generating includes generating a base score andthen adjusting the base score by a tenure adjustment or factor based onthe investing tenure of each investor. Generally, base score generationor calculation includes the following operations, but the embodiment isnot so limited: calculate the IR for each investor over the last 2years; take the minimum IR and subtract this from all IRs (results in alower limit of 0); take the maximum IR and divide all IRs by the max IR(results in an upper limit of 1); generate a base score by multiplyingeach investor's IR by 100 (results in an IR range between 0 and 100).The skill score is generated by adjusting the base score for investingtenure. In applying a tenure adjustment, if the investor has more than 2years of investing tenure, a tenure adjustment factor of 1.0 is used. Ifthe investor has 2 years or less of investing tenure, a tenureadjustment factor used is (0.2+0.7×Tenure/1.75); this adjustment keepsthe entire base score for everyone that has a tenure of 2 years or more,but scales down the score for investors that have less than 2 years oftenure, and, for investors with less than 3 months of investing tenure,the algorithm retains 30% of their base score.

FIG. 8 is a flow diagram for generating a skill score 800 using theInformation Ratio (IR), under an embodiment. The skill score representsan investing tenure of an investor. Generating the skill score of anembodiment comprises calculating the IR 802 of each investor. The IRrepresents active return on a corresponding investment position adjustedfor risk. Generating the skill score of an embodiment comprisesidentifying a minimum IR 804 among the plurality of investors.Generating the skill score of an embodiment comprises generating a firstinterim score 806 for each investor by subtracting the minimum IR fromthe IR of each investor. Generating the skill score of an embodimentcomprises identifying a maximum first interim score 808 of the pluralityof investors. Generating the skill score of an embodiment comprisesgenerating a second interim score 810 for each investor by dividing thefirst interim score by the maximum first interim score. Generating theskill score of an embodiment comprises generating a base score 812 foreach investor by multiplying the second interim score by 100. Generatingthe skill score of an embodiment comprises generating the skill score814 for each investor by applying a tenure factor to the base score.

The skill score of an alternative embodiment represents a combination ofthe IR and SR of the investor. FIG. 9 is a flow diagram for generatingthe skill score 900 using the Sharpe Ratio (SR) and Information Ratio(IR), under an alternative embodiment. To calculate the skill score ofthis alternative embodiment, the ranking component calculates the SR andIR for each individual. The ranking component calculates the SR 902 bycalculating the monthly excess return for each investor (the monthlyexcess return for an investor is defined as the monthly return for theinvestor minus the risk free return) for each month for the past Nyears. The IDSS of an embodiment uses two (2) years for the calculationof SR, but it could be for any time period. The SR is computed bydividing the average of the monthly returns by the standard deviation ofthe monthly returns.

Let the monthly returns for an investor be denoted by {r₁, r₂, r₃, . . .r₂₄} and the risk-free returns be denoted by {r^(f) ₁, r^(f) ₂, r^(f) ₃,. . . r^(f) ₂₄}, where the subscripts denote each monthly period forwhich the return is calculated. The excess monthly return (r^(xs) _(i)}for month i is then given by,

r ^(xs) _(i) =r _(i) −r ^(f) _(i)

The average of the excess monthly returns is then calculated as

${{\overset{\_}{r}}_{xs} = \frac{\sum\limits_{i = 1}^{N}r_{i}^{xs}}{N}},$

and the standard deviation is calculated as

$\sigma = {\sqrt{\frac{\sum\limits_{i = 1}^{N}\left( {r_{i}^{xs} - {\overset{\_}{r}}_{xs}} \right)^{2}}{N}}.}$

Finally, the Sharpe Ratio is obtained by

${S \cdot R} = {\frac{{\overset{\_}{r}}_{xs}}{\sigma}.}$

The ranking component calculates the IR 904 by calculating the monthlyexcess active return for each investor for each month for the past Nyears. The monthly excess active return for an investor is defined asthe monthly return for the investor minus a benchmark return; thebenchmark can be any index, or security, for example, the Standard andPoor's (S&P) 500 (S&P 500), Dow Jones Industrial Average (DJIA), andNational Association of Securities Dealers Automated Operations(NASDAQ), to name a few. The IDSS of an embodiment currently uses two(2) years for the calculation of IR, but it could be for any timeperiod. The IR is computed by dividing the average of the weightedmonthly active returns by the standard deviation of the monthly returns.

Let the monthly returns for an investor be denoted by {r₁, r₂, r₃, . . .r₂₄} and the benchmark returns be denoted by {r^(b) ₁, r^(b) ₂, r^(b) ₃,. . . , r^(b) ₂₄}, where the subscripts denote each monthly period forwhich the return is calculated. The excess active monthly return (r_(a)^(xs) _(i)} for month i is then given by,

r _(a) ^(xs) _(i) =r _(i) −r ^(b) _(i)

Once the excess active monthly returns are calculated, they are weightedusing a weighting function (which may be a constant, a linear function,an exponential function but not limited to these). The IDSS uses anexponential weighting scheme to weight the returns as

r _(weighted) _(i) ^(xs) =r _(a) ^(xs) i×exp(−t),

where t=0 for the most recent month and decreases linearly by 1 eachprior month, and

${\overset{\_}{r}}_{{weighted}^{xs}} = {\frac{\sum\limits_{i = 1}^{N}r_{{weighted}_{i}^{xs}}}{N}.}$

The average of the un-weighted excess monthly returns is then calculatedas

${{\overset{\_}{r}}_{a}^{xs} = \frac{\sum\limits_{i = 1}^{N}{r_{a}^{xs}i}}{N}},$

and the standard deviation is calculated as

$\sigma = {\sqrt{\frac{\sum\limits_{i = 1}^{N}\left( {{r_{a}^{xs}i} - {\overset{\_}{r}}_{a}^{xs}} \right)^{2}}{N}}.}$

Finally, the IR is obtained by

${LR} = {\frac{{\overset{\_}{r}}_{{weighted}^{xs}}}{\sigma}.}$

The ranking component calculates a Final Ratio (FR) 906 as a weightedaverage of the IR and the SR as,

FR=a×SR+(1−a)×IR.

Generating the skill score of the alternative embodiment continues bynormalizing 908 the FR into the skill score as follows. Generating theskill score of an embodiment comprises identifying a minimum FR amongthe plurality of investors. Generating the skill score of an embodimentcomprises generating a first interim score for each investor bysubtracting the minimum FR from the FR of each investor, and thisproduces a lower limit of zero (0). Generating the skill score of anembodiment comprises identifying a maximum FR of the plurality ofinvestors. Generating the skill score of an embodiment comprisesgenerating a second interim score for each investor by dividing thefirst interim score by the maximum FR, and this produces an upper limitof one (1). Generating the skill score of an embodiment comprisesgenerating the skill score 812 for each investor by multiplying thesecond interim score by 100, and this operation produces an FR rangebetween 0 and 100.

Generating the skill score of an embodiment comprises generating theskill score for each investor by applying a tenure factor 910 to thebase skill score. If an investor has more than two (2) years ifinvesting tenure, the tenure adjustment factor is 1.0, otherwise, tenureadjustment is a decay function (e.g., linear decay, exponential decay,etc.). The tenure adjustment keeps the entire base score for everyonehaving tenure of 2 years or more, but scales down the score forinvestors that have less than 2 years tenure. If an investor has lessthan 3 months of investing tenure, the skill score is multiplied by atenure factor of 0.3.

Regardless of method used to generate the skill score, the rankingcomponent of an embodiment uses a persistence score to find and filterinvestors that have high IR purely by luck. In a world of randominvestors, it is assumed that the probability of winning is the same asthe probability of losing. In the absence of any information other thanwhat is known to everyone else, the unskilled, common investor is aslikely to outperform as he or she is to underperform. Here a ‘win’ isdefined as outperforming a benchmark, not just making money. Theproperties of the binomial distribution are then used to calculate ameasure of skill. This is very similar to a coin toss experiment, wherethe probability of getting a head (win) in a coin toss is 0.5. Thus, ina series of coin toss experiments the number of heads and tails shouldconverge. This is similar to the situation where there is no investingskill. If, however the number of heads is significantly different fromthe number if tails, it is determined that the coin is biased.

The probability of winning n times out of N trials is given by

${\Pr_{n}^{N} = {\frac{N!}{{n!}{\left( {N - n} \right)!}} \cdot p^{n} \cdot \left( {1 - p} \right)^{N - n}}},$

where p is the winning probability (in this case 0.5). Other propertiesof the binomial distribution used herein are the mean as

x=np,

the variance as

σ² =Np·(1−p),

and the standard deviation as

S.D.=σ=√{square root over (σ²)}=√{square root over (Np·(1−p))}.

A distance is then calculated from the mean for each user and used torank the users as described in the example cases below.

In a first example case, a user makes 9 winning bets out of 10. Thedistance is calculated in this example as follows: calculate the Winingscore—this is simply the number of wins, and in this case, Winning scoreis 9; calculate the mean for the case with 10 trials as the number oftrials (N) times the probability of success (p) (e.g., Mean=10×0.5=5);calculate the SD (Sigma) for binomial distribution with N=10 as

σ=√{square root over (10×0.5×(1−0.5))}=√{square root over (2.5)}=1.58;

calculate a distance from the mean as

Delta=(Winning Score−Mean)/Sigma

(e.g., Delta=(9−5)/1.58=2.53). The distance is a measure of hw far thewinning score is from the mean, counted in terms of Sigma. In a normaldistribution, 66% of all values lie within 1 sigma of the mean, ˜95%within 2 sigma and about 99% values lie within 3 sigma of the mean. Thelarger the distance the greater the likelihood the result is skill andnot luck.

In a second example case, a user makes 90 winning bets out of 100. Thedistance is calculated in this example as follows: calculate the Winingscore—this is simply the number of wins, and in this case, Winning scoreis 90; calculate the mean for the case with 100 trials as the number oftrials (N) times the probability of success (p) (e.g., Mean=100×0.5=50);calculate the SD (Sigma) for binomial distribution with N=100 as 5;calculate a distance from the mean as Delta=(Winning Score−Mean)/Sigma(e.g., Delta=(90−50)/5=8.0).

In a third example case, a user makes 75 winning bets out of 100. Thedistance is calculated in this example as follows: calculate the Winingscore—this is simply the number of wins, and in this case, Winning scoreis 75; calculate the mean for the case with 100 trials as the number oftrials (N) times the probability of success (p) (e.g., Mean=100×0.5=50);calculate the SD (Sigma) for binomial distribution with N=100 as 5;calculate a distance from the mean as Delta=(Winning Score Mean)/Sigma(e.g., Delta=(75−50)/5=5.0). These examples show that a person who makes75 winning bets out of 100 is more skillful than one who makes 9 winningbets out of 10 even though the latter wins 90% of the time, while theformer wins 75% of the time; however, the latter has fewer bets to showpersistence.

Following calculation of delta's for all investors, the deltas arenormalized. The normalization of an embodiment is performed as follows.The delta scores are exponentiated as

Delta Score=e ^(Delta).

Once a delta score has been calculated for all investors, the smallestdelta is selected or identified and subtracted from the delta scores ofeach investor. The largest delta score is selected or identified, andthe delta score of each investor is divided by the largest delta score.All delta scores are multiplied by 100 to generate the persistencescore, where the persistence score is in the range of 0 to 100.

FIG. 10 is a flow diagram for generating a persistence score 1000, underan embodiment. Generating the persistence score of an embodimentcomprises determining a winning score 1002 for each investor as a numberof times the investor outperformed a benchmark. Generating thepersistence score of an embodiment comprises calculating a mean 1004 foreach investor using a number of trials. The number of trials is a sum ofa number of times the investor outperformed the benchmark and a numberof times the investor failed to outperform the benchmark. Generating thepersistence score of an embodiment comprises calculating a standarddeviation 1006 of the number of trials for each investor. Generating thepersistence score of an embodiment comprises calculating a distance fromthe mean 1008 for each investor as a first quantity divided by thestandard deviation. The first quantity is determined by subtracting themean from the winning score. Generating the persistence score of anembodiment comprises generating a delta score 1010 for each investor byexponentiating the distance.

Generating the persistence score of an embodiment comprises identifyinga minimum delta score 1012 among the delta scores of the plurality ofinvestors. Generating the persistence score of an embodiment comprisesgenerating a third interim score 1014 for each investor by subtractingthe minimum delta score from the delta score of each investor.Generating the persistence score of an embodiment comprises identifyinga maximum third interim score 1016 of the plurality of investors.Generating the persistence score of an embodiment comprises generating afourth interim score 1018 for each investor by dividing the thirdinterim score of each investor by the maximum third interim score.Generating the persistence score of an embodiment comprises generatingthe persistence score 1020 for each investor by multiplying the fourthinterim score by 100.

The ranking methodology continues by selecting or determining whichinvestors are not only skillful and persistent in their skill, but alsoconfident. A confidence score measures how big an investor wins whenthey make a winning bet versus how small they lose when they make alosing bet. The score itself is defined as the ratio of portfolioweighted average win percentage vs. the portfolio weighted average losspercentage as

${{{Confidence}\mspace{14mu} {Score}} = \frac{\overset{\_}{W}}{\overset{\_}{L}}},$

where W is the portfolio weighted average win percentage and L is theportfolio weighted average loss percentage.

The portfolio weighted average win percentage W and the portfolioweighted average loss percentage L are calculated as, respectively,

${\overset{\_}{W} = \frac{\sum\limits_{i}^{\;}{\lambda_{i} \cdot g_{i}}}{N_{Gains}}},{\overset{\_}{L} = {\frac{\sum\limits_{i}^{\;}{\lambda_{i} \cdot l_{i}}}{N_{Losses}}.}}$

Here λ is the weight (percentage) of the position in question in theentire portfolio, g is the percentage gain for the position in question,1 is the percentage loss for the position in question, and N_(Gains) andN_(Losses) are the number of winning and losing bets respectively.

Ideally, the objective is to identify investors that have either a highor low confidence score. These would be investors who either win bigwith large percentages of their portfolio and lose small with smallpercentages of their portfolios (i.e., if someone made 200% on aposition that was 1% of the portfolio, then that should count as 2% (1%of 200%) gain not 200% gain, and vice versa).

Generally, confidence score is generated by calculating, for each trademade in the ranking period, a gain/loss. In this case the gain/loss alsoneeds to take into account the portfolio percentage the position inquestion made up in the portfolio at the beginning, so the portfolioneeds to be valued at the time of Buy transactions. Once the wins andlosses are calculated this way, the average win and average loss iscalculated, and a ratio of wins to losses is determined. An upper limitis created for the weighted win ratio so that people with zero losses donot get an infinite win ratio. These scores are normalized in the sameway as described above for the skill and persistence scores to provide aconfidence score in the range of 0 to 100.

FIG. 11 is a flow diagram for generating a confidence score 1100, underan embodiment. Generating the confidence score of an embodimentcomprises calculating a weighted average win percentage 1102 for aportfolio of each investor. Generating the confidence score of anembodiment comprises calculating a weighted average loss percentage 1104for a portfolio of each investor. Generating the confidence score of anembodiment comprises generating the confidence score 1106 as a ratio ofthe weighted average win percentage to the weighted average losspercentage.

FIG. 12 is a flow diagram for generating a weighted average winpercentage 1200, under an embodiment. Generating the weighted averagewin percentage of an embodiment comprises calculating a first quantity1202 by multiplying a percentage of the investment position in theportfolio and a percentage gain for the investment position. The firstquantity is calculated for each period of time of a plurality of periodsof time for which the investment position outperformed a benchmark.Generating the weighted average win percentage of an embodimentcomprises calculating a second quantity 1204 by summing each firstquantity for all periods of time of the plurality of periods of time forwhich the investment position outperformed the benchmark. Generating theweighted average win percentage of an embodiment comprises calculatingthe weighted average win percentage 1206 by dividing the second quantityby a total number of investment positions that outperformed thebenchmark.

FIG. 13 is a flow diagram for generating a weighted average losspercentage 1300, under an embodiment. Generating the weighted averageloss percentage of an embodiment comprises calculating a third quantity1302 by multiplying a percentage of the investment position in theportfolio and a percentage loss for the investment position. The thirdquantity is calculated for each period of time of a plurality of periodsof time for which the investment position underperformed a benchmark.Generating the weighted average loss percentage of an embodimentcomprises calculating a fourth quantity 1304 by summing each thirdquantity for all periods of time of the plurality of periods of time forwhich the investment position underperformed the benchmark. Generatingthe weighted average loss percentage of an embodiment comprisescalculating the weighted average loss percentage 1306 by dividing thethird quantity by a total number of investment positions thatunderperformed the benchmark.

Generating the weighted average gain percentage and the weighted averageloss percentage also includes establishing a portfolio value for theportfolio at a time when the investment position is entered, and usingthe portfolio value to establish the percentage gain and the percentageloss. Therefore, the confidence score represents for each investor amagnitude of outperforming a benchmark when the investment positionoutperforms relative to a magnitude of failing to outperform thebenchmark when the investment position underperforms.

The final rank score, as described above, identifies skilled investors(high Information Ratio) who win most of the time (high PersistenceScore) and win big (high Confidence score). The final rank score isgenerated by taking a weighted average of the three component scores,which produces or results in a number between 0 and 100, as

Final  Rank  Score = α × Skill  Score + β × Persistence  Score + γ × Confidence  Score, where  α + β + γ = 1.

Generating the rank score of an embodiment thus comprises generating aweighted average of the skill score, the persistence score and theconfidence score. Generating the rank score of an embodiment comprisesforming a skill component by multiplying the skill score by firstweight. Generating the rank score of an embodiment comprises forming apersistence component by multiplying the persistence score by a secondweight. Generating the rank score of an embodiment comprises forming aconfidence component by multiplying the confidence score by a thirdweight. Generating the rank score of an embodiment comprises calculatingthe rank score by summing the skill component, the persistence componentand the confidence component. A sum of the first weight, the secondweight and the third weight equals one (1). The rank score is used toclassify each investor by the rank score of the investor.

Following application of any adjustments to the base score, asappropriate to a member and the member's corresponding data, theresulting score is assigned to the member. The ranking component 104uses the assigned score of members to “rank” 402 each member and compareeach member against other members, individuals, and benchmarks. Theranking component 104 assesses the scores of the total member populationand assigns each member to a group, where each group represents apercentile of the total member population. The ranking component 104 ofan embodiment, for example, includes five groups into which a member isplaced, the groups including elite members (top 1%), platinum members(top 2-10%), gold members (top 11-25%), silver members (top 26-50%), andbronze members (remaining). The ranking component 104 of alternativeembodiments can include an alternative number of groups and/oralternative percentiles corresponding to the groups (e.g., decilegroups, etc.).

The IDSS components use the member rankings 402 to “match” a member withother members who may share similar portfolio construction, holdings,risk level, investing strategies, and/or other demographics (e.g., age,zip code, education), and who may have significantly outperformed themember with lower incurred risk levels. By doing so, the IDSS greatlyinforms a particular member about the state of his/her investmentapproach and performance and potentially improves future returns for themember.

The IDSS also uses the ranking 402 to understand or provide informationas to how different ranks of investors are making investment decisions.For example, the IDSS enables visibility into what the “top 10%” membersare holding, investing in, watching, and/or transacting. Furthermore,the IDSS provides insight into the top aggregated holdings, watch listitems, and buys and sells across each of the rank categories or groups.The IDSS enables tracking of certain securities over time to understandhow a particular security (e.g., Apple Inc.) trends in “popularity” overtime and identify when large blocks of individuals having a certain rankare trading. Therefore, while trading activity in the form of totalvolume of securities traded is publicly available information, the IDSSadds a component of information as to which investors (e.g., “good” or“bad” investors) are participating in the trading activity.

The member rankings 402 are also used as benchmarks by which each membercan evaluate his/her performance against his/her appropriate benchmarkusing his/her portfolio components. For example, the rankings 402 serveto benchmark individual member performance against relevant marketindices over the tenure of data, to benchmark individual returnperformance against other individuals, to benchmark individual returnperformance against an aggregate of individuals based upon ranked returnperformance and various demographic characteristics including, but notlimited to, zip code, income level, investment strategies, education,professional affiliation, and social networks, to name a few.

The IDSS rankings 402 also provide “Instant Asset Allocation” benchmarksto peer rank groups. The IDSS allocates member positions into core assetcategories and provides an asset allocation model. The IDSS thereforeenables comparison of individual asset allocation with other peer rankgroups. The IDSS also creates “best practices” asset allocation modelsbased upon the top performance of individuals using holdings, riskexposure, beta, Sharpe and other relevant metrics. The IDSS of anembodiment uses or includes a proactive “Dynamic Asset Allocation” modelby which users can set allocation parameters enabling the IDSS toautomatically notify users when allocation parameters are violated.

The IDSS uses data of the investor rankings 402 to rate securities. Therating component 106 is configured to rate 602 publicly-traded equities,exchange-traded funds (ETFs), mutual funds, options, fixed incomeinstruments, and/or other available investment vehicles based on theperformance of the individuals that own, buy, and/or sell positions. Forexample, a member doing research on Apple Inc. can search the IDSS forinformation on the stock. The IDSS subscribes a rating 602 to the stockbased on the number and quality of other members that currently own thestock, the number and quality of members that are shorting the stock,the number and quality of members that previously own the stock, and therelative performance of those members. Equities that have been recentlypurchased by aggregate top ranked members and/or equities that continueto be owned by top ranked members will receive relatively high ratings.Positions that have either been liquidated by top ranked performersand/or acquired primarily by lower ranked performers will receiverelatively low ratings.

FIG. 14 is a block diagram of the rating component 106 of the IDSSconfigured to provide or output security ratings 1402 in response to oras a result of operations on rank data 402 and real-time trade data 112,under an embodiment. The real-time trade data 112 can be received fromone or more real-time market services 312 to which the rating componentis coupled, but is not so limited.

FIG. 15 is a flow diagram for rating equities 1500 using the ratingcomponent 106 operating on rank data 402 and real-time trade data 112,under an embodiment. Components of the IDSS are generally configured andfunction to receive 1502 rank data of the investors. The rank dataincludes rank groups derived from investment data and trade data of theinvestors. The IDSS uses all rank behavior and activity to generateratings and, in on doing, sorts positions based on cumulative ownership,watch and transaction behavior and selects or designates 1504 a rankgroup having a pre-specified ranking (e.g., the highest ranking, lowestranking, etc.). The selected group is used as a predictor group. Asecurity rating is generated 1506 for each security using tradeparameters of real-time trade data of investors of the predictor group.

Generally, the rating component 106 uses information of the memberrankings 402 to generate security ratings 1402. Similar to the SchwabEquity Rating System and Morningstar's mutual fund star rating system,the IDSS provides a proprietary rating for publicly-availablesecurities; however, in contrast to these conventional systems, thebasis for the IDSS security ratings 1402 is the individual memberrankings as described below. Additionally, other parameters (e.g.,earnings per share (EPS), price-to-earnings (P/E) ratio, balance sheetstrength, etc.) may be used along with the rank data to generate thesecurity ratings. The security ratings 1402 function to associate witheach stock either a buy or a sell recommendation together with “strengthof signal” indications of strength of the recommendation.

The IDSS evaluates activity of certain ranks of members in the aggregateto rate publicly-traded equities in real-time. The ratings 1402 includethe ratings A, B, C, D, and F, but alternative embodiments can usealternative scales or alternative gradations. The IDSS ratings component106 is configured to sort or organize security positions based on thecumulative ownership, watch, and transaction behavior by rank. Forexample, movements in and out of positions by members of particularranks 402 will be catalogued and analyzed (e.g., buys and sells by“Elite” and “Platinum” investors are likely more attractive buyingopportunities for corresponding purchases by lower ranked investors).The rating component 106 is configured to also use publicly availablefinancial data, such as fundamentals, valuation, earnings momentum, andrisk, in the generation of ratings 1402. The rating 1402 of anembodiment is based on rank 402, with a principal focus on ownership andactivity (e.g., buying, selling, retaining) of the members ranked at thetop and bottom 10%, but is not so limited.

The rating component 106 evaluates strategies of the members to provideinformation on strategies that have worked previously and strategieslikely to be successful in the future. For example, regression analysiscan be applied to investment data to identify the core components thatcan lead to a predictive model of future out-performance for some periodof time. The opposite is also true, whereby the rating component candetermine investors and strategies that have been found tounder-perform. An anti-fraud component provides fraud detection so thatmembers are prevented from using the system to manipulate stocks,thereby affecting their performance and rating. The rating component 106thus provides information of expected future performance of particularequities in the form of the security ratings 1402. Consequently, theIDSS provides data and predictive information or models that, onaverage, is relatively more accurate than individual analysts atbrokerage firms, mutual fund managers, and professional investmentadvisors.

The ratings 1402 form the basis for comparisons across differentpositions. For example, the IDSS can track movements over time andcompare how securities have trended over certain time horizons. The IDSScan compare individual members based on the “rating” 1402 of positionsin their portfolios. Other positions can be provided or displayed to amember, which may provide more significant upside with reduced risk thanthe ones currently in the member's portfolio. The IDSS can also “see”across various industry sectors and investing strategies to develophypotheses around areas of potential out-performance andunder-performance.

The IDSS of an embodiment is configured to display the ratings 1402 tomembers via a portal (e.g., IDSS web site). A rating is displayed tocorrespond to each security or position in the member portfolios. TheIDSS can also use filtering to display other securities that are relatedto a particular security but which have a higher “rating” than theparticular security.

The security ratings are displayed using a “strength of signal” graphicor plot, for example. Because the rankings 402 generated by the IDSSassist members in better understanding the underlying positions thatmembers of different ranks are holding, watching, and transacting, theIDSS uses the rankings 402 to generate information of and display viathe strength of signal plot the “net buying” activity of particularpositions through application of a calculation that aggregates all ofthe different rankings into one measure. The IDSS calculates thismeasure over time to determine an understanding of trends. This way, amember can compare various positions quickly to gauge whether he/sheshould sell or buy.

FIG. 16 is a strength of signal plot 1600, under an embodiment. The IDSScalculates the strength of signal 1600 over time to determine anunderstanding of trends, and the strength of signal measure is visuallyillustrated 1602 in the strength of signal plot 1600. The absolute valueof the strength of signal value 1602 indicates the strength of asecurity rating for the corresponding security, and the sign (positionon y-axis relative to center-point) of the strength of signal value 1602indicates if it is rated as a buy or a sell (e.g., a positive strengthof signal value indicates a buy and a negative strength of signal valueindicates a sell). This enables a member to compare variouspublicly-traded securities quickly to determine whether he/she shouldsell or buy.

In generating strength of signal, the organizing of rank categories isdone by scoring each category. The scoring includes determining thenumber of trades per rank category (e.g., elite, bronze, etc.), andweighting the number of trades of each rank category by the relativeperformance of that rank category compared to other categories.Therefore, the scoring includes determining a ratio for each category bydividing the average return for that category by the average return forthe bronze category, where the performance of the bronze category servesas a base category in this example.

The categories are arranged along the x-axis of the strength of signalplot 1600 according to their score (e.g., category with lowest score isplaced in left-most position along the x-axis, category with highestscore is placed in right-most position along the x-axis). Alternatively,securities can be placed on the strength of signal plot 1600 without anyexpress correlation to rank categories. Therefore, the IDSS generatesthe strength of signal plot 1600 by identifying the category of membersthat provide the best performance (e.g., members with an Elite rank,members with a Platinum rank, etc.) and organizing the categories alongthe x-axis of a plot according to the relative performance. The x-axisof the plot of an embodiment thus provides an indication of whichmembers are buying or selling a security.

The IDSS determines a number of buys and sells done for each security,and calculates the net transactions for each security by subtracting thenumber of sells from the number of buys for a period of time. Thestrength of signal measure 1602 is determined by dividing the nettransactions by the total number of buys and sells of the security. They-axis of the strength of signal plot 1600 therefore represents thisaverage buy/sell activity (“net buy” or “net sell”), or strength ofsignal.

The strength of signal plot 1600 of an embodiment provides informationabout which members have been buying a particular security over acertain time period. Using the strength of signal plot 1600 as anexample, a security located in the “top right” corner of the plot 1600means that top-ranked investors (e.g., Elite members in this example)have been buying this stock during the period, which might make thisstock an attractive “buy” candidate for other members. Furthermore, anembodiment presents or displays the momentum of the strength of signalfor a security over some period of time. The momentum includesinformation as to the difference in the size and placement of the circleover time but is not so limited.

The volume of trading for each security is represented by the size orarea of the circle representing the security 1602 on the plot 1600.Consequently, the strength of signal plot 1600 of an embodiment alsoprovides information of the volume of trading for each security.

Strength of signal can also be used, for example, to determine a stockrating score. The stock rating score of an embodiment, also referred toherein as “CakeTake” or a sentiment score, answers a simple question,“what is the collective ‘take’ of ranked members on a particular stockor security in terms of their recent buying and selling activity?” Inother words, the stock rating score is a signal that distills thecollective mood or sentiment of ranked members around a particular stockor security where they have been active that considers the historicalperformance and rankings of those members. The stock rating score is nota recommendation to buy or sell a particular stock or security nor is ita stock rating. The stock rating score does offer, however, a quickdirectional read on what ranked members have been buying or selling. Inthis sense, the stock rating score goes beyond what people may be sayingor thinking, and looks at what they have been actually doing in theirown portfolios.

Calculation or generation of the stock rating score generally begins byestablishing a count of all current members who bought or sold aparticular stock or security during the time period in question (e.g.,prior week, month, quarter, year, etc.). It is to be understood thatthis count is a count of “the noses” of members, not the dollar amounts,how many shares each member bought or sold, or what they may continue tohold.

Further, consideration is given to other factors including, but notlimited to, the specific ranking of each member who bought or soldduring the time period. To get of better sense of the directional moodof the members, greater weight is placed on the actions of morehighly-ranked members and less weight is placed on lower-ranked members.Additionally, greater weight is placed on more recent buying and sellingactivity because more recent activity likely says more about the mood orsentiment of members than activity that occurred some time ago.

For each position where sufficient data is available to calculate astock rating score, all of the information described above is thenrolled up into the collective ‘take’ of ranked members for each timeperiod and an overall composite ‘take’ considering all time periods isalso displayed. The purpose of the stock rating score is to gain betterinsights into whether ranked members have been buying or sellingparticular stocks or securities over each of the time periods and whichway they are headed. A stock rating score is not calculated forsecurities that have not had sufficient trading activity. The stockrating score and member rankings are calculated and updated periodically(e.g., hourly, daily, etc.).

More specifically, the stock rating score generated under an embodimentof the IDSS is a numerical score for each stock for which it iscalculated based on the activity in the IDSS. Thus, the “Cake Take” is arating system for any publicly traded security stocks, mutual funds andETFs-based on the historical performance, real-time trading activity,and holding decisions of a group of individual investors. The stockrating score uses calculated ranges from 0 to 100, but is not solimited.

The IDSS of an embodiment includes any number of modules that generateand/or include aggregated data derived from the investment data,transactional information, and brokerage account information. As anexample, the IDSS of an embodiment, as described below with reference toFIG. 23, includes one or more modules that include a Cake Take ratingmodule. The Cake Take module generates and/or includes the Cake Take, asdescribed herein.

When applied to an investment position including equities or stocks, therating system generates a numerical score for each equity held in a dataset. The numerical score comprises the average of the rank score of thegroup of individuals holding the stock in question.

FIG. 17 is a flow diagram for rating a plurality of investment positions1700, under an embodiment. The rating of an investment position of anembodiment comprises identifying a set of investors 1702 correspondingto each investment position of the plurality of investment positions. Aplurality of sets of investors corresponds to the plurality ofinvestment positions, and each investor of the set of investors owns theinvestment position.

The rating of an investment position of an embodiment comprises, foreach set of investors, generating a rank score for each investor 1704.The rank score categorizes each investor relative to other investors ofthe set of investors for a time period of time of the plurality of timeperiods. The rating of an investment position of an embodimentcomprises, for each set of investors, generating an average rank score1706 for the period of time. Generating the average rank score comprisesgenerating an average rank score for the time period by averaging therank scores of all investors of the set of investors.

The rating of an investment position of an embodiment comprises, foreach set of investors, generating a trailing rank score 1708 byaveraging the rank scores across the plurality of periods of time.Generating the trailing rank score comprises averaging the rank scoresfor all time periods of the plurality of time periods.

The rating of an investment position of an embodiment comprisesgenerating a stock rating score 1710 for each investment position bycombining the average rank score and the trailing rank score of the setof investors corresponding to the investment position. Generating thestock rating score comprises generating a weighted average of theaverage rank score and the trailing rank score. Generating the stockrating score comprises forming an average rank component by multiplyingthe average rank score by a first weight. Generating the stock ratingscore comprises forming a trailing rank component by multiplying thetrailing rank score by a second weight. Generating the stock ratingscore comprises calculating the stock rating score by summing theaverage rank component and the trailing rank component. A sum of thefirst weight and the second weight equals one (1). The rating of aninvestment position of an embodiment comprises normalizing the stockrating scores for the plurality of investment positions.

The rating of an investment position of an embodiment comprises ratingeach of the plurality of investment positions according to the stockrating scores of each investment position. Rating the plurality ofinvestment positions comprises organizing the plurality of investmentpositions according to the corresponding stock rating scores. Theorganizing comprises a descending stock rating score, but the embodimentis not so limited. Rating the plurality of investment positionsgenerally comprises forming a rating hierarchy comprising a plurality ofcategories organized according to the stock rating score. The ratinghierarchy of an embodiment comprises a 15-point scale, but is not solimited.

As an example of the rating of an embodiment, consider a stock ABC heldby five investors (investors 1-5) with the rank scores shown in thetable of FIG. 18. The average rank score assigned to stock in thisexample is 41.96 (the average of the five Rank scores). Also calculatedis the trailing rank score for each stock over a specified period (e.g.,last 30 days). The stock rating score is calculated as a weightedaverage of the current score and the 30 day trailing average score, as

Stock Rating Score=α×Current Score+β×30 Day Trailing Score

-   -   where α+β=1    -   and,

${{30\mspace{20mu} {Day}\mspace{14mu} {Trailing}\mspace{14mu} {Score}} = \frac{\sum\limits_{i = 1}^{30}S_{i}}{30}},$

where S_(i) is the score for the Stock in question on day i.

Once scores are calculated for each stock, the set of scores isnormalized resulting in each stock getting a score on a 0 to 100 scale.The stocks are then rated on a 15-point scale (e.g., A+ through F−), asshown in the table in FIG. 19, and organized according to categories.

The plurality of categories of an embodiment comprise a first categorycomprising a first 2.5 percent of investment positions according to thestock rating score, wherein the first category has a rating score of 15.The plurality of categories of an embodiment comprise a second categoryfollowing the first category, the second category comprising a firstsubsequent three (3) percent of investment positions according to thestock rating score, wherein the second category has a rating score of14. The plurality of categories of an embodiment comprise a thirdcategory following the second category, the third category comprising asecond subsequent 4.5 percent of investment positions according to thestock rating score, wherein the third category has a rating score of 13.The plurality of categories of an embodiment comprise a fourth categoryfollowing the third category, the fourth category comprising a thirdsubsequent six (6) percent of investment positions according to thestock rating score, wherein the fourth category has a rating score of12. The plurality of categories of an embodiment comprise a fifthcategory following the fourth category, the fifth category comprising afourth subsequent seven (7) percent of investment positions according tothe stock rating score, wherein the fifth category has a rating score of11.

The plurality of categories of an embodiment comprise a sixth categoryfollowing the fifth category; the sixth category comprising a fifthsubsequent eight (8) percent of investment positions according to thestock rating score, wherein the sixth category has a rating score of 10.The plurality of categories of an embodiment comprise a seventh categoryfollowing the sixth category, the seventh category comprising a sixthsubsequent nine (9) percent of investment positions according to thestock rating score, wherein the seventh category has a rating score of9. The plurality of categories of an embodiment comprise an eighthcategory following the seventh category, the eighth category comprisinga seventh subsequent 20 percent of investment positions according to thestock rating score, wherein the eighth category has a rating score of 8.The plurality of categories of an embodiment comprise a ninth categoryfollowing the eighth category, the ninth category comprising an eighthsubsequent nine (9) percent of investment positions according to thestock rating score, wherein the ninth category has a rating score of 7.The plurality of categories of an embodiment comprise a tenth categoryfollowing the ninth category, the tenth category comprising a ninthsubsequent eight (8) percent of investment positions according to thestock rating score, wherein the tenth category has a rating score of 6.

The plurality of categories of an embodiment comprise an eleventhcategory following the tenth category, the eleventh category comprisinga tenth subsequent seven (7) percent of investment positions accordingto the stock rating score, wherein the eleventh category has a ratingscore of 5. The plurality of categories of an embodiment comprise atwelfth category following the eleventh category, the twelfth categorycomprising an eleventh subsequent six (6) percent of investmentpositions according to the stock rating score, wherein the twelfthcategory has a rating score of 4. The plurality of categories of anembodiment comprise a thirteenth category following the twelfthcategory, the thirteenth category comprising a twelfth subsequent 4.5percent of investment positions according to the stock rating score,wherein the thirteenth category has a rating score of 3. The pluralityof categories of an embodiment comprise a fourteenth category followingthe thirteenth category, the fourteenth category comprising a thirteenthsubsequent three (3) percent of investment positions according to thestock rating score, wherein the fourteenth category has a rating scoreof 2. The plurality of categories of an embodiment comprise a fifteenthcategory following the fourteenth category, the fifteenth categorycomprising a fourteenth subsequent 2.5 percent of investment positionsaccording to the stock rating score, wherein the fifteenth category hasa rating score of 1.

In order to calculate ratings for mutual funds and ETFs, the IDSS of anembodiment applies the ranking algorithm of the ranking component to themutual funds and ETFs. In so doing, an embodiment uses returns adjustedfor expenses when calculating the Information Ratio of the mutual fundor exchange-traded fund (ETF). Furthermore, the variable a in the rankscore formula is set equal to 1.0. Moreover, an embodiment considersadditional factors such as the fund manager's historical performance,number of years investing, underlying holdings, turnover, and fundinflows and outflows, for example.

The mutual fund/ETF ranking of an embodiment comprises generating askill score for each mutual fund/ETF of a plurality of mutualfunds/ETFs, as described above with reference to an individual investor.The skill score represents an Information Ratio (IR) of the mutualfund/ETF. The mutual fund/ETF ranking of an embodiment comprises usingthe skill score as the rank score and the rating of the mutual fund/ETF.

The objective of the skill score, or rank score, is to generate anumeric score between 0 and 100 for each mutual fund/ETF. The skillscore takes into account the IR and investing tenure of each mutualfund/ETF. Generally, skill score generating includes generating a basescore and then adjusting the base score by a tenure adjustment or factorbased on the investing tenure of each mutual fund/ETF. Generally, basescore generation or calculation includes the following operations, butthe embodiment is not so limited: calculate the IR for each mutualfund/ETF over the last 2 years; take the minimum IR and subtract thisfrom all IRs (results in a lower limit of 0); take the maximum IR anddivide all IRs by the maximum IR (results in an upper limit of 1);generate a base score by multiplying each mutual fund/ETF IR by 100(results in an IR range between 0 and 100). The skill score is generatedby adjusting the base score for investing tenure. In applying a tenureadjustment, if the mutual fund/ETF has more than 2 years of investingtenure, a tenure adjustment factor of 1.0 is used. If the mutualfund/ETF has 2 years or less of investing tenure, a tenure adjustmentfactor used is (0.2+0.7×Tenure/1.75); this adjustment keeps the entirebase score for every mutual fund/ETF that has a tenure of 2 years ormore, but scales down the score for mutual funds/ETFs that have lessthan 2 years of tenure, and, for mutual funds/ETFs with less than 3months of investing tenure, the algorithm retains 30% of their basescore.

FIG. 20 is a flow diagram for generating a skill score 2000, and hence amutual fund/ETF rank score, under an embodiment. The skill scorerepresents an investing tenure of mutual fund/ETF. Generating the skillscore of an embodiment comprises calculating the IR 2002 of each mutualfund/ETF. The IR represents active return on a corresponding investmentposition adjusted for risk. Generating the skill score of an embodimentcomprises identifying a minimum IR 2004 among the plurality of mutualfunds/ETFs. Generating the skill score of an embodiment comprisesgenerating a first interim score 2006 for each mutual fund/ETF bysubtracting the minimum IR from the IR of each mutual fund/ETF.Generating the skill score of an embodiment comprises identifying amaximum first interim score 2008 of the plurality of mutual funds/ETFs.Generating the skill score of an embodiment comprises generating asecond interim score 2010 for each mutual fund/ETF by dividing the firstinterim score by the maximum first interim score. Generating the skillscore of an embodiment comprises generating a base score 2012 for eachmutual fund/ETF by multiplying the second interim score by 100.Generating the skill score of an embodiment comprises generating theskill score 2014 for each mutual fund/ETF by applying a tenure factor tothe base score.

Once skill scores are calculated for each mutual fund/ETF, the mutualfunds/ETFs are then rated on a 15-point scale (e.g., A+ through F−), asshown in the table in FIG. 21, and organized according to categories.

The plurality of categories of an embodiment comprises a first categorycomprising a first 1.5 percent of investment positions according to therating score, wherein the first category has a rating score of 15. Theplurality of categories of an embodiment comprise a second categoryfollowing the first category, the second category comprising a firstsubsequent two (2) percent of investment positions according to therating score, wherein the second category has a rating score of 14. Theplurality of categories of an embodiment comprise a third categoryfollowing the second category, the third category comprising a secondsubsequent two (2) percent of investment positions according to therating score, wherein the third category has a rating score of 13. Theplurality of categories of an embodiment comprise a fourth categoryfollowing the third category, the fourth category comprising a thirdsubsequent 3.5 percent of investment positions according to the ratingscore, wherein the fourth category has a rating score of 12. Theplurality of categories of an embodiment comprise a fifth categoryfollowing the fourth category, the fifth category comprising a fourthsubsequent 3.5 percent of investment positions according to the ratingscore, wherein the fifth category has orating score of 11.

The plurality of categories of an embodiment comprise a sixth categoryfollowing the fifth category, the sixth category comprising a fifthsubsequent 3.5 percent of investment positions according to the ratingscore, wherein the sixth category has a rating score of 10. Theplurality of categories of an embodiment comprise a seventh categoryfollowing the sixth category, the seventh category comprising a sixthsubsequent five (5) percent of investment positions according to therating score, wherein the seventh category has a rating score of 9. Theplurality of categories of an embodiment comprise an eighth categoryfollowing the seventh category, the eighth category comprising a seventhsubsequent five (5) percent of investment positions according to therating score, wherein the eighth category has a rating score of 8. Theplurality of categories of an embodiment comprise a ninth categoryfollowing the eighth category, the ninth category comprising an eighthsubsequent five (5) percent of investment positions according to therating score, wherein the ninth category has a rating score of 7. Theplurality of categories of an embodiment comprise a tenth categoryfollowing the ninth category, the tenth category comprising a ninthsubsequent nine (9) percent of investment positions according to therating score, wherein the tenth category has a rating score of 6.

The plurality of categories of an embodiment comprise an eleventhcategory following the tenth category, the eleventh category comprisinga tenth subsequent 10 percent of investment positions according to therating score, wherein the eleventh category has a rating score of 5. Theplurality of categories of an embodiment comprise a twelfth categoryfollowing the eleventh category, the twelfth category comprising aneleventh subsequent 10 percent of investment positions according to therating score, wherein the twelfth category has a rating score of 4. Theplurality of categories of an embodiment comprise a thirteenth categoryfollowing the twelfth category, the thirteenth category comprising atwelfth subsequent 13 percent of investment positions according to therating score, wherein the thirteenth category has a rating score of 3.The plurality of categories of an embodiment comprise a fourteenthcategory following the thirteenth category, the fourteenth categorycomprising a thirteenth subsequent 13 percent of investment positionsaccording to the rating score, wherein the fourteenth category has arating score of 2. The plurality of categories of an embodiment comprisea fifteenth category following the fourteenth category, the fifteenthcategory comprising a fourteenth subsequent 14 percent of investmentpositions according to the rating score, wherein the fifteenth categoryhas a rating score of 1.

The methodologies described above can be applied to rank the managersthat manage the mutual funds. This results in rankings of mutual fundmanagers. If a fund manager managed more than one fund, the manager'srank score is a weighted average of the funds managed by the manager as

Rank Score=Σ_(i=1) ^(N) w _(i) ×S _(i),

where N is the total number of funds, w_(i) is the weight assigned tofund i, and S_(i) is the score of Fund i. The weight corresponding to afund is proportional to the assets under management for that particularfund as

${w_{i} = \frac{AUM}{\sum\limits_{j = 1}^{N}{AUM}_{j}}},$

and,

Σ_(i=1) ^(N) w _(i)=1,

These formulas are extensible to include other fund variables such as:fund inflows and outflows, portfolio turnover, and top holdings.

The IDSS uses the security ratings 1402 along with portfolio data 2204of members to provide or output performance data 2202 includinginvestment recommendations to members, under an embodiment. FIG. 22 is ablock diagram of the recommendation component 108 of the IDSS coupled toreceive security rankings 1402 and portfolio information or data 2104,under an embodiment. The recommendation component 108 is generallyconfigured to evaluate the security ratings 1402 with risk level, assetallocation and stocks held by an investor, compare a set of membersusing the ranking and security ratings 1402, and generaterecommendations 2202 for the stocks held by the member in response tothe comparisons. The recommendations 2202 include recommendations tocertain investment vehicles based on the aggregate holdings of otherindividual members based on performance, demographic characteristics,and social networks.

Regarding recommendations, the SS recommendation component 108 uses thesecurity rating data 1402 to analyze each member's portfolio and tocalculate and monitor performance measures so that a member is provideddata on his/her portfolio returns, risk level, risk-adjusted performanceand ranking. The recommendation component 108 uses data of a member'sdesired risk level (e.g., selected, entered 114 by the member orcalculated by the system), asset allocation strategy and existingportfolio 2204 and compares it with the security ratings, and providesrecommendations 2202 on which stocks to sell (e.g. sell F-rated stocks)and which to buy (e.g., buy A-rated or B-rated stock based on desiredrisk level).

The IDSS of an embodiment provides recommendations including an indexfor all or a subset of IDSS members, their portfolio holdings andperformance for the purposes of measuring certain stock marketperformance. Similar to the Dow Jones Industrial Average, Russell 5000,and the Standard and Poor's 500 to name a few, the index, also referredto as the “individual investor index,” can provide relevant insightsinto the state of the stock market at a particular time. The indexillustrates the relative performance of the MSS members across variouscross-sections of the IDSS membership, for example, all members, oracross a group based on rank. The index can be based on member data likecurrent holdings, positions bought, and/or positions sold, but is not solimited. The Index could be licensed to third parties who might beinterested in the real-time and daily sentiment of the individualinvesting community.

As an example, the IDSS of an embodiment provides an index that isformed based on a member's holdings. The IDSS forms the index for amember by setting a starting index value (e.g., 100) on the first day ofevaluation. The starting index value for purposes of this example is100, but the starting index value is not limited to any particularvalue. Across-section of the IDSS membership is selected for the index(e.g., Elite group). The IDSS then identifies the current holdings ofthe selected group. On the second day, the daily performance of thecurrent (as selected at the end of the first day) holdings of theselected group is calculated. The performance is based on the increaseor decrease in value of the holdings from the market close of the firstday to the market close of the second day, or in increments during thesecond day to provide intra-day/real-time values of the index. The dailyperformance forms a performance percentage (e.g., increase by 3%). Thestarting index value is adjusted by the performance percentage (e.g.,the adjusted or new index value is 103 (100 multiplied by the quantity(1+0.03). Likewise, on the third day, the performance percentage of theend of second day holdings of the selected group is calculated based ontheir value during and at the end of the third day, and the index valueof the second day is adjusted by the performance percentage. The indexvalue adjustment proceeds on subsequent days as described above.

FIG. 23 is a block diagram of the investment data sharing system (IDSS)2300, under an alternative embodiment. The IDSS includes numerouscomponents running under one or more processors. The IDSS components ofan embodiment include an aggregation component or engine 102, a rankingcomponent or engine 104, a rating component or engine 106, arecommendation component or engine 108, and any number of modules 150.The IDSS includes couplings or connections to sources or components fromwhich historical investment data 110, real-time market data 112 andbrokerage information or data can be received, fetched, gathered, and/orinputted. The investment data 110 and real-time market data 112 can bereceived periodically or continuously in real-time or near real-time viasynchronization over electronic couplings with brokerages, marketservices, and/or other third-party sources of data. The IDSS includescouplings or connections to brokerage accounts 160 belonging to members,and the IDSS can facilitate or execute actions in the brokerage accountsvia these couplings, as described in detail below. The IDSS is alsoconfigured to receive data or information 114 manually entered by amember.

The IDSS components 102-108 and 150 can be components of a singlesystem, multiple systems, and/or geographically separate systems. TheIDSS components 102-108 and 150 can also be subcomponents or subsystemsof a single system, multiple systems, and/or geographically separatesystems. The IDSS components 102-108 and 150 can be coupled to one ormore other components (not shown) of a host system or a system coupledto the host system.

The IDSS components are configured and function, individually and/orcollectively, to provide data products or outputs as described herein,including investor rankings, security ratings, risk-adjusted portfolioperformance, and/or buy/sell recommendations, as described in detailherein. The IDSS also includes portals and/or couplings 130 by which anynumber of members can access the data products relating to theirindividual accounts or portfolios as well as the accounts or portfoliosof members to whom they are linked. The portals and/or couplings 130 ofan embodiment include, for example, connections between a member'scomputer and the IDSS via a web site provided or hosted by the IDSS.

The IDSS includes any number of modules 150, as described above, thatgenerate and/or include aggregated data derived from the investmentdata, transactional information, and brokerage account information. Asan example, the IDSS modules 150 of an embodiment include a Cake Takerating module, as described above. As another example, the IDSS modules150 of an embodiment include a performance index module or component,also described herein as the Cakedex module. The Cakedex modulegenerates and/or includes the Cakedex, as described in detail below.

The Cakedex module of the IDSS of an embodiment generates or produces aperformance index or index, referred to herein as “Cakedex” or “Cakeindex”, to measure how a set of individual investors perform over timerelative to one or more general market indices (e.g., S&P 500, Dow,NASDAQ, etc.) and other commonly referenced benchmarks. The term“Cakedex” refers to a suite of securities, funds, or ETF groupingsderived from the data described herein (e.g., authentic historicaltransactions, current holdings, and real-time trading activity ofretirement and/or brokerage accounts, etc.) and used to measure howcertain individual investors perform over time relative to the generalmarket indices.

Cakedex is constructed on a forward-looking basis to track ahypothetical composite or aggregate portfolio or fund comprising theactual portfolios of a subset or pre-specified set of IDSS members (alsoreferred to herein as “index investors”). The Cakedex of an embodimenttracks a hypothetical composite portfolio comprising the top N %investors in a data set, where the top N % investors are identifiedbased on rank score, as described above. Cakedex does not take intoaccount any transaction costs, brokerage commissions, taxes or otherexpenses related to its composition when measuring index performance.The index investors can include, for example, some number (e.g., 10, 50,100, 1,000, etc.) or percentage (e.g., 1%, 5%, 10%, 20%, etc.) of topperformers across all investment vehicles over one or more periods oftime, some number or percentage of top performers across one or moresets or groups of investment vehicles over one or more periods of time,some number or percentage of top performers focused on technology stocksover one or more periods of time, some number or percentage of worstperformers across all investment vehicles over one or more periods oftime, some number or percentage of worst performers across one or moresets or groups of investment vehicles over one or more periods of time,to name a few. The Cakedex index then follows the aggregate portfolio ofthe index investors for a period of time at which point the IDSSre-evaluates and/or rebalances the member base.

FIG. 24 is a flow diagram for a method of generating a performance index2400, under an embodiment. The method of an embodiment comprisesgenerating 2402 a rank score for each investor relative to a pluralityof investors of which the investor is a member. The generating of therank score, as described in detail above, uses investment data of aportfolio of the investor, and the portfolio includes at least oneinvestment position. The method of an embodiment comprises selecting2404 a set of investors from the plurality of investors based on therank score of each investor. The method of an embodiment comprisesgenerating 2406 the performance index to provide a measure ofperformance of top individual investors over time relative to a marketindex. Generation of the performance index includes generating acomposite portfolio comprising investment positions of each portfolio ofeach investor of the set of investors.

In operation, using the investment data that the IDSS receives frominvestors and their respective brokerages, the IDSS generates orcalculates the rank score for these investors as described above and,using the rank scores, identifies a top set or pool of investors. Therank score can be generated using any rank method described herein(e.g., using SR, using IR, using a combination of SR and IR, etc.). Thetop pool of investors of an embodiment comprises the top 10% ofinvestors, but the embodiment is not limited to the top 10%. The IDSSgenerates a hypothetical composite portfolio, the Cakedex, comprisingthe portfolio holdings of the top pool of investors. Once a top pool ofinvestors is identified, performance of the set is tracked or followedfor some number of months, N (N≧1), irrespective of whether or not theseinvestors remain as the top pool in subsequent months.

To calculate the weighted composition of the Cakedex, followingidentification of the top pool of investors and thus the investmentpositions included in the Cakedex, the IDSS calculates the percentageportfolio allocation across the different investment positions (e.g.,stocks, mutual funds and Exchange Traded Funds (ETFs)) for each investorin the top pool. For each investment position, the IDSS calculates theaverage percentage by taking a weighted average percentage allocationfor all investors in the top pool. The weighting is proportional to eachinvestor's rank score. Thus, the IDSS determines the weightedcomposition of the Cakedex as follows: generate a weight for eachinvestor's portfolio relative to the other investors in the top pool;determine a weight of each investment position in each investor'sportfolio relative to the other investment positions in that portfolio;determine a weight of each investment position in the Cakedex by forminga first quantity by multiplying the weight of an investor's portfolio bythe weight of an investment position in that investor's portfolio, andsumming across the top pool of investors the first quantity for therespective investment position for each investor holding that investmentposition. The composition of the Cakedex is calculated and updated onsome time frequency (e.g., daily, weekly, monthly, some other period oftime).

As an example, a top pool of investors includes three (3) investors withtheir respective rank scores (investor A with rank score 95, investor Bwith rank score 75, and investor C with rank score 45). The weight foreach investor's portfolio relative to the other investors in the toppool is calculated for the Cakedex hypothetical portfolio as follows:

Investor A's portfolio has a weight of 95/(95+75+45)=44.18%;

Investor B's portfolio has a weight of 75/(95+75+45)=34.88%;

Investor C's portfolio has a weight of 45/(95+75+45)=20.93%.

Suppose investor A and investor B each hold stock XYZ, and investor Cdoes not hold stock XYZ. Also assume, for purposes of this example that10% of investor A's portfolio is in XYZ and 5% of investor B's portfoliois in XYZ. Therefore, the weighting of XYZ in the Cakedex is calculatedto be 6.16% ((10%×44.18%)+(5%×34.88%)=6.16%). An equal weightingapproach would yield a 5% weighting.

The performance of the Cakedex is measured daily on a “forward looking”basis for some time period, such as a month. On the first day of thefollowing month, the IDSS again evaluates the current pool in the dataset, calculates their rank scores and identifies the top pool ofinvestors. The IDSS then recalculates the composition of the Cakedexbased on factors that include changes to the holdings of such topinvestors, and additions or subtractions to the pool of such investors,but the embodiment is not so limited. This process is then repeated forsuccessive months. Note that the investors who were in the top pool inthe previous months (up to N months ago, where N months is the periodfor which the top investors are followed) and are not in the top pool inthe following month are still included in the top pool.

The Cakedex family of funds include one or more of the following or acombination of two or more of the following, but the embodiment is notso limited: Cakedex Index—Aggregated holdings of “top performing”investors; Cakedex Hidden Gems—Aggregated least widely held, bestperforming positions by certain investors; Cakedex Balanced (50% of theN least widely held positions by certain investors+50% of the N mostwidely held positions); Cakedex by Cake Take (Comprised of all (or thetop N) securities with a Cake Take of A+, A or A−); Cakedex funds byinvestor profession; Cakedex funds by investor zipcode/region; Cakedexfunds by investor age-group; Cakedex funds by investor goals (playmoney, college funds, retirement, trust etc.; Cakedex funds by investorincome range; Cakedex long—short strategy funds; Cakedex funds byinvestor strategy (buy and hold, day trader, market timer, passiveetc.); Cakedex funds by investment style (value, growth, balanced etc.);Cakedex market cap funds (large cap, small cap, mid cap); Cakedex Sectorfunds (Technology, Basic Materials, Healthcare etc.); Cakedex funds byfundamental style (value, growth, blend).

In addition to creating a Cakedex fund by investors, as described above,a Cakedex fund or index can be created to include funds instead ofindividual investment positions. The Cakedex fund created to includefunds is generated by grading or ranking mutual funds in the same manneras described above for individual investors, and then generating theCakedex fund to include the top mutual funds based on any desiredcharacteristic.

The IDSS of an embodiment enables member-investor matching in that itallows a member to identify other members with whom he/she has aninvestor relationship as measured by a pre-specified criteria. FIG. 25is a flow diagram for investor matching 2500 using the IDSS, under anembodiment. Components of the IDSS receive data inputs 2502corresponding to members. The data inputs include data of investmentstrategies, portfolio holdings, watch lists, transactions, performanceand assorted demographic data, and other data as described above.Weights are assigned or selected 2504 for data components of the inputdata, and a score is generated 2506 for each member based on the inputdata and the corresponding weights. A member is automatically matched2508 to other members according to his/her score. The matching isspecific to criteria selected by the member requesting or controllingthe matching. The results of the matching return information of membershaving the same score (within a pre-specified variance range) as themember requesting the match.

The matching is specific to criteria selected by the member requestingor controlling the matching, as described above. For example, when thecriteria is investment approach, a member uses this criteria to controlthe matching based on how other members who share a similar investmentapproach are performing and what investments those other members aretrading. The results of the match identify members having the sameinvestment approach score (within a pre-specified variance range) as themember requesting the match. In this manner, a user can identifysecurities that he/she may be interested in adding to his/her portfolio.

The IDSS of an embodiment thus uses the ranking and rating datadescribed above to provide real-time, automated, highly-customizedinvestment “advice” to individual investors at a fraction of the cost ofexisting players. Leveraging the security rating described above, theIDSS provides or suggests improvements to a member's existing portfolioby suggesting changes to current asset allocation or substitutions tocurrent allocation with less risky, higher-performing positions,explicitly based on a member's specific investment strategy. Forexample, if a member currently owns a stock that the IDSS rates as an“F”, the IDSS can suggest an alternative “A” rated position.

The recommendation engine of an embodiment helps investors optimizetheir investments by generating or producing a set of securities (e.g.,stocks, ETFs, mutual funds) that mimics a target asset allocation while,at the same time, reducing the portfolio risk and expenses associated tomutual fund/ETF fees and increasing portfolio return anddiversification. The target asset allocation is decided by a level ofrisk tolerance, but is not so limited.

The recommendation engine of an embodiment includes a mutual fundengine, target asset allocation models, and a fit score, as described indetail herein. The mutual fund engine provides expense reduction to aninvestor by automatically identifying higher rated (based on mutual fundCake Take) investment positions having lower associated fees andsuggesting these substituted funds to investors based on the higherrating and lower fees. Because the fund ratings are calculated fromfee-adjusted returns, the higher rated fund (rated as described aboveunder an embodiment of the IDSS) generally provides superior returnseven after accounting for fees. The higher-rated investment positionsprovided as suggested substitutes under an embodiment are suggestedwithin desired categories (e.g., large cap, energy, technology,international, fixed income, etc.). FIG. 26 is an example output of themutual fund engine of the recommendation engine, under an embodiment.

The target asset allocation models, driven by rank and risk metrics,provide an investor with information of a gap analysis between targetand current investments. The allocation models use the rank (asdescribed above) to derive asset allocation models for differentinvestor characteristics such as risk, years to retirement, andretirement shortfall, and use that as another basis for investmentrecommendation and goal planning.

The asset allocation models use investor groupings to identify optimalasset allocation models for different levels of risk tolerances. Thesemodels are then used as target asset allocation models for all otherinvestors. It has been found that derived asset allocation models fromthe investment data rival those systems of major brokerage firms andmutual fund companies. FIG. 27 shows sample results of derived assetallocation models, derived under an embodiment, in view of results frommajor brokerage firms and mutual fund companies.

The IDSS of an embodiment then generates or calculates the differencebetween a particular investor's current allocation and a desired targetallocation and reveals specific investment positions (e.g., stocks,mutual funds, ETFs, etc.) that can fill the gap. FIG. 28 is an exampleoutput showing the difference between a particular investor's currentallocation and a desired target allocation, under an embodiment.

The IDSS of an embodiment applies the asset allocation target models toidentify sector-level allocations for investors. FIG. 29 is an exampleoutput showing application of the asset allocation target models toidentify sector-level allocations for investors, under an embodiment.Thus, within each sector, the IDSS identifies investment positions thatare highly rated by and are consistent with the target asset allocationat the desired or specified level of risk.

The recommendation engine provides a “Fit Score” that provides apersonalized “fit” of a particular investment position (e.g., stock,fund, ETF, etc.) for a particular investors current investments. The FitScore is an objective measure that automatically calculates how well aparticular investment position e.g., stock, mutual fund, ETF, etc.) fitsinto a particular portfolio and communicates to an investor theappropriateness of and the size for inclusion of a new holding. For anygiven portfolio, once a risk tolerance and a target asset allocation hasbeen determined, the recommendation engine can identify theappropriateness of a stock, mutual fund, and/or ETFs for a particularinvestor's portfolio. The new investment position must satisfy the giventarget asset allocation and have a high rating (rating as describedherein) and, in the case of mutual funds and ETFs, also have low expenseratios.

Once such a set of investment positions is identified, each investmentsecurity can be substituted into a portfolio and a simulation run thatcalculates allocation level, risk and diversification measures for thenew portfolio. The MSS can then automatically determine the “fit score”,or, how appropriate (or not) is the chosen position and what dollarvalue constitutes the ideal allocation.

The quality of the fit is measured by a number of components including,but not limited to, the following: risk score; diversification score,stock/fund rating score; fees score. Each of the four components of thefit score has a value in the range of 1 to 5. These correspond toquintiles that are calculated based on all the data available to theIDSS. For instance, for all portfolios linked to the IDSS, a risk and adiversification measure are calculated. The portfolios in the top 20%highest risk are assigned a risk score of 1, the next subsequent 20%risk are assigned a risk score of 2, the next subsequent 20% risk get ascore of 3, the next subsequent 20% risk are assigned a risk score of 4,and the next subsequent 20% risk get a score of 5.

In determining diversification score, the portfolio in the bottom 20%for diversification get a diversification score of 1, the nextsubsequent 20% get a sore of 2, the next subsequent 20% get a sore of 3,the next subsequent 20% get a sore of 4, and the next subsequent 20% geta sore of 5.

For the rating score, the IDSS uses the ratings themselves, and everysecurity having a rating of A+, A, A− gets a score of 5, securitiesrated B+, B, B− get a score of 4, securities rated C+, C, C− get a scoreof 3, securities rated D+, D, D− get a score of 2, and securities ratedF+, F, F− get a score of 1.

For the fees score, the IDSS uses the expense ratios for mutual fundsand ETFs. Therefore, the securities falling in the top 20% highestexpense ratio get a score of 1, the next subsequent 20% get a score of2, the next subsequent 20% get a score of 3, the next subsequent 20% geta score of 4, and the next subsequent 20% get a score of 5. All stocksare given a score of 5.

Each of the four scores (risk score; diversification score, stock/fundrating score; fees score) has a weight associated with it, and the finalFit Score is the sum of the four component scores multiplied by theirrespective weights. The weight of an embodiment has a default value of5. In an embodiment, the weights corresponding to the risk score anddiversification score are calculated dynamically for each portfoliousing the following criteria: if current portfolio risk score is lessthan 3, then risk weight is calculated as the quantity (8—new riskscore), and diversification weight is calculate as the quantity (10—riskweight); if current portfolio risk score is equal to or greater than 3,and new risk score is equal to or greater than 3 and diversificationscore is less than 3, then diversification weight is calculated as thequantity (8—new diversification score), and risk weight is calculate asthe quantity (10—diversification weight). If these conditions are notsatisfied, then the default value is used. In this manner, the IDSS canautomatically determine if a contemplated new holding is or is not afit.

FIG. 30 is an example output showing the Fit Score for a particularstock, under an embodiment. In this example, the stock quote page showsinformation of the stock for Fidelity Spartan Total Market Index Fund(FSTMX). This example page also displays a Fit Score for FSTMX stock(“FITSCORE 88”) relative to the investor's portfolio, where the FitScore is generated as described above. The output further includes agraphic that plots the rating versus the fees for the FSTMX stock.

The IDSS of an embodiment provides electronic search capabilities tomembers for searching a database of member-investor information for thepurposes of determining whether certain investment vehicles werepreviously or are currently held by other members. For example, a membercan search for other members using data of a name, employer, holdings,performance, zip code, income levels, education, investing strategies,and professional and/or industry experience, to name a few.

The networking or linking of members provided by the IDSS also enablesautomated sharing of “authenticated” investment information with othermembers including, but not limited to, sharing of investment returns,holdings, such as portfolios, stock, bond, mutual fund, exchange tradedfunds, options, and other publicly available investment vehicles, aswell as trading activity. As such, members can “allow” other members ofthe IDSS community to access relevant investment information.

The sharing of investment information further enables members toestablish “private” Investment Clubs. An investment Club is formed toinclude a set of members who share a common portfolio or investmentvehicles. In contrast to ranking individual members, the IDSS of anembodiment is configured to apply the ranking techniques described aboveto the collective membership of each Investment Club in order togenerate club rankings for each Investment Club. The club rankings canthen be compared and/or used as described above in reference toindividual member rankings.

The IDSS is also configured to enable members to “tag” the securityholdings of certain other members to which they are linked for thepurposes of easily and quickly monitoring their performance andprogress. This can be done via a “My Profile” section of the IDSSwebsite, for example, but is not so limited.

The IDSS enables a user to perform one or more of the following: “tag” aweb page of an Internet web site; “add” an electronic link to a “MyProfile” page of the IDSS web site; automatically distribute electroniclinks, news sources, and communications or messages via e-mail orinstant messaging to members to whom the sending member is linked. As anexample, a member reading a blog about Apple Inc, finds the article veryinformative as it mentions a new key feature that will allow Applecomputers to run Windows. The user “tags” the URL of the blog posting orarticle and with one click “sends” the article to IDSS members thatfollow her portfolio.

The IDSS is configured to provide automated real-time trading activitynotifications of individual member trading activity to other members.This allows members to set up an automated notification system, wherebythey can view or be apprised of real-time buy and sell activity of othermembers. This can take the form of a personal “IDSS Stock Ticker” wherepositions of all or certain IDSS members are displayed, but is not solimited.

The IDSS enables automatic trading (auto-trade), for example, inresponse to the real-time disclosure of trading activity between linkedinvestors. Consequently, the IDSS components can be configured toautomatically mimic the trading activity (e.g. buying the same stock) ofone member account in another account. Generally, a member (“followermember”) can “link” his account to another member's account (“mentor”).When the mentor buys stock in Apple Inc., any followers willautomatically purchase the same number of shares in their accounts,assuming sufficient funds.

More specifically, a first member sells 100 shares of stock in CompanyX. Another member linked to the first member can configure her accountto automatically sell 100 shares of stock in Company X in response tothe real-time notification of the linked member's trade activity. Theautomatic trading activity in response to linked investor data includesautomatic trading in third-party investment accounts (e.g., withthird-party broker/dealers and/or registered investment advisers) and/orinvestment accounts provided on the platform.

With the advent of online trading in the early 1990's to its now defacto method for buying and selling stocks for individuals, the act oftrading securities has never been easier, cheaper, and more accessibleby millions of investors. It is hard to remember but only 10 years ago asingle trade could cost $200 and a customer had to call an actual personon the phone to effect a transaction. Now with $5 trades (going tofree), shrinking spreads, and ubiquitous services offering real-timetrades, customer satisfaction with act of trading online is very high.

However, the context for investing by individuals has not changed withthis technical evolution and the confusion of whether to buy, sell orhold has proven to be suboptimal, as the average investor underperformsmost major market indices due to a variety of factors associated withtrading. It has been proven by behavioral finance researchers thatindividuals hold on to underperforming holdings too long, sell winnerstoo early, trade too often so as to increase their fees and taxes, andhave non-diversified portfolios that increase their risk to dangerouslevels. In a sense, having the powerful capabilities of online tradingso readily available, it is actually making it more difficult forindividual investors to be smart with their finances.

The IDSS changes this by making it relatively simple for individualinvestors to create a smart asset allocation plan that matches theirrisk levels and age, to select the optimal holdings, and to staydisciplined and on track across of their accounts. The IDSS of anembodiment enables an individual to effect a transaction from the IDSSplatform to their accounts via a trading API of the IDSS.

FIG. 31 is a block diagram of the IDSS 100 including the trading API3100, under an embodiment. The IDSS 100 comprises components asdescribed above with reference to FIG. 1 and FIG. 23 and as describedelsewhere herein. The IDSS 100 couples or connects to brokerage firmsand/or client account and trading systems. The IDSS 100 exchangesinformation or data with the brokerage firms and/or client account andtrading systems, the data including but not limited to credentialsaccount balances, order information, order status, transactioninformation, confirmation, fee deduction and payment information.

The IDSS thus provides a personalized investment management platformthat allows individual investors to manage all of their retirement andbrokerage accounts from a central location and to get objective,personalized, actionable insights into how they can do better. Customerscan connect an unlimited number of accounts to the IDSS and are notrequired to physically transfer their assets from their existing bank orbrokerage firm to the IDSS in order to use the service. The IDSSseamlessly connects to retirement and brokerage accounts through itstrading API and updates the investment data multiple times a day.

The IDSS of an embodiment enables and provides a platform for investingbased on real brokerage information, historical performance and trades.The IDSS enables individual investors to communicate and share theirreal brokerage information with one another without revealing personalinformation such as net worth, the value of the portfolios, or thenumber of shares owned. The IDSS does not require that individualstransfer their assets or open up a new account to take advantage of theplatform. The IDSS allows seamless communication to occur amongstindividuals and across the different online brokerage platforms. Forexample, a couple where one spouse has an account at Fidelity and theother spouse has an E*Trade account can seamlessly communicate via theIDSS, as described herein.

With the IDSS platform, individuals can see one another's portfolioholdings, historical performance, and trading activity. With the benefitof this unprecedented transparency into the actions of otherindividuals, the IDSS compresses the time and effort that is currentlyrequired to go from conducting research (i.e., which investments to buyor sell) to taking action (i.e., making a specific buy or sell in anaccount(s)).

Without the IDSS, individual investors have few options in gettingtrusted help with managing their retirement and brokerage accounts andmaking trades. These options include, but are not limited to: paying anadvisor or broker to make portfolio suggestions and/or manage theirinvestments for them; making trades on their own at a discount onlinebrokerage; and/or entering into a Legal Power of Attorney (LPOA) toempower another, non-professional, to make trades in their account(s) ontheir behalf.

The IDSS includes a process and service for a new way to make trades inindividuals' existing brokerage account, The IDSS will facilitatetrading actions from its platform into individuals' existing retirementand/or brokerage accounts via a trading API and from any website ordevice and, ultimately, anywhere where people are consuming their IDSSinformation across the web (such as Facebook, third party distributionpartners, on mobile phones, etc.).

The IDSS of an embodiment comprises a trading API that generates,executes, monitors and records trade orders across multiple differentbrokerages and accounts. Trades can be executed by the trading APIeither manually or they can be triggered by a variety of triggers, forexample, not by the user (e.g., sell a particular security when theprice reaches a certain value, etc.), or algorithmic (exposure tocertain market sectors crosses a threshold limit), or trades/actions ofother people, etc.

Once a trade order has been initiated by one or more methods, asdescribed herein, the trading API automatically issues a command to thebroker-dealer to initiate authentication of the trade. Then, the tradingAPI issues a command to execute the trade order. The trading APIautomatically issues aperiodic command to check the status of the tradeorder. Upon receiving a trade order response confirming the execution ofthe trade order, the trading API automatically notifies the individualof the status. If the trade order gets rejected (e.g., selling moresecurity than held), then the trading API automatically notifies thecustomer of the status and the reason.

The trading API also performs transaction reconciliation, and orderrecord keeping and an audit trail for full compliance. In so doing, thetrading API automatically reads back the order to a person submittingthe order so they can verify that the broker properly understood theorder instruction. Depending on the deployment configuration, this wouldbe performed by either the investor in question or by the trading APIitself. The trading API also keeps a record of transactions.

There are numerous ways that the IDSS and trading API enable the “crossplatform community investing” functionality from its platform to onlinebrokerage accounts held by IDSS investor-members. For example, a memberwho has linked her brokerage account(s) to the IDSS and selects the“Trade” button on the IDSS website facilitates a transaction in herbrokerage account(s) via the trading API. In another example, aninvestor can set up a rule or series of rates that trigger a transactionfrom the IDSS into the investor's account. Furthermore, a member who haslinked her brokerage account(s) to the IDSS and is notified of an actionby one or more other individual investors on the IDSS is given theoption via the IDSS of making a similar trade in her own account(s)based on that activity.

As another example of the IDSS trading API enabling the cross platforminvesting functionality, a member who has linked her brokerageaccounts(s) to the IDSS can automatically, via the IDSS, make the sameor similar trade as one or more IDSS members based on that activity.Additionally, a member who has linked her brokerage account(s) to theIDSS and is notified of a change in the particular rating of a securityallows the IDSS to facilitate trades to her account(s) on her behalfbased upon that change. A further example allows a member who has linkedher brokerage account(s) to the IDSS to allow the IDSS to facilitatetrades to her account(s) on her behalf based upon IDSS derivedalgorithms based on the aggregated behavior of other IDSS members orpredetermined criteria such as changes in asset allocation or pricingtriggers. Moreover, a member who has linked her brokerage account(s) tothe IDSS can allow the IDSS to facilitate trades to her account(s) onher behalf based upon third party triggers (e.g., Facebook, Twitter,etc.).

FIG. 32 is a flow diagram for transaction facilitation 3200 by the IDSS,under an embodiment. The transaction facilitation comprises forming 3202an electronic network between or to include a plurality of investors.The electronic network includes the IDSS and couplings or connections toportfolios and online brokerage accounts of the investors. Thetransaction facilitation comprises sharing 3204 between the investorsvia the electronic network investment data and/or brokerage data. Theinvestment data comprises data of the portfolios, and a portfoliocomprises at least one investment position. The brokerage data comprisesdata of the brokerage accounts. The transaction facilitation comprisesexecuting 3206 a first action involving an investment position in afirst portfolio and/or a first brokerage account of a first investor.Execution of the first action is in response to the investment dataand/or brokerage data indicating a second action taken in a secondportfolio and/or a second brokerage account of at least one secondinvestor.

The IDSS can be used to automate trading and/or provide additionaltrading and advisory products. For example, the IDSS could providepackaged solutions in the form of automated portfolio management inwhich a member pays an annual “advisory” fee and the IDSS maintains anasset allocation model customized for that member's investment goals.The IDSS could also offer investment products like mutual funds bycertain sectors and investment strategies, thus creating a proprietarytrading desk or IDSS mutual fund that seeks to capitalize on the IDSSaggregated data set through the inclusion of equities held by thehighest ranked members, and selling shares in the mutual fund to thepublic. Additionally, the IDSS might provide a brokerage serviceincluding automatic trading.

Furthermore, the IDSS can be coupled or partner with online brokeragefirms, who could add the IDSS to their proprietary system. Under thisconfiguration, the IDSS would be an option within the online brokeragesite so that account data is automatically populated. Also, the IDSSranking system can be replicated within the partner environment tocreate a “mutual fund” of specific individuals that can be proprietaryto specific partners.

Currently, there is no platform for professional investment managers tobe “accredited” based upon their actual historical performance. TheIDSS, however, provides a professional accreditation ranking systemallowing an independent third party to “verify” performance ofprofessionals. This is similar to other services like Better BusinessBureau, BBB Online, Consumer Reports, and Good Housekeeping Seal ofApproval, to name a few.

Conventional fee systems and the corresponding opaque mechanisms forextracting these fees, makes it difficult to hold investment advisorsaccountable for under-performance. Investment advisory service fees ofthe IDSS can be based on the actual delta improvement over a particularbenchmark traced to the given advice, rather than on current industrypractices of percentage of assets and/or flat fees. Thus, the IDSSincludes a fee system under which a user pays nothing to the IDSSservice if he/she fails to meet certain benchmarks, and pays apercentage of the incremental benefit of advice provided by or under theIDSS. Consequently, the IDSS establishes an “IDSS Universal Benchmark”from an amalgam of major indices which will serve as the benchmark forcalculating fees on an annual basis. Under this system, if the “IDSSUniversal Benchmark” was 4% for the year, and a user generated an 8%return, his/her fees would be some percentage of the 4% in incrementalreturns he/she generated presumably because of the IDSS.

The embodiments described herein include a method for generating aperformance index, the method using a processor-based investment system.The method of an embodiment comprises generating a rank score for eachinvestor relative to a plurality of investors of which the investor is amember, the generating of the rank score using investment data of aportfolio of the investor, wherein the portfolio comprises at least oneinvestment position. The method of an embodiment comprises selecting aset of investors from the plurality of investors, the selecting based onthe rank score of each investor of the plurality of investors. Themethod of an embodiment comprises generating the performance index toprovide a measure of performance of top individual investors over timerelative to a market index, the generating of the performance indexcomprising generating a composite portfolio comprising investmentpositions of each portfolio of each investor of the set of investors.

Generating the performance index of an embodiment comprises determininga portfolio weight for the portfolio of each investor, wherein theportfolio weight is relative to other investors of the set of investors.

Generating the performance index of an embodiment comprises determiningan investment weight of each investment position in the portfolio ofeach investor, wherein the investment weight is relative to otherinvestment positions in the portfolio.

Generating the performance index of an embodiment comprises determininga weight of each investment position in the performance index.

Determining the weight of each investment position in the performanceindex of an embodiment comprises forming a first quantity for eachinvestment position in a portfolio of an investor by multiplying theportfolio weight of the portfolio by the investment weight of theinvestment position.

Determining the weight of each investment position in the performanceindex of an embodiment comprises summing across the portfolios of theset of investors the first quantity for all like investment positions.

The method of an embodiment comprises tracking performance of the set ofinvestors born period of time.

The method of an embodiment comprises periodically updating acomposition of the performance index.

Periodically updating of an embodiment comprises accounting for changesto at least one of the portfolios and the set of investors.

Periodically updating of an embodiment comprises accounting for changesto contents of the portfolio of each investor of the set of investors.

Periodically updating of an embodiment comprises accounting for changesto investors in the set of investors.

The set of investors of an embodiment comprises the top N percentage ofinvestors of the plurality of investors, wherein N is any number that isgreater than zero.

The market index of an embodiment includes at least one of Standard andPoor's (S&P) 500 (S&P 500), Dow Jones Industrial Average (DEA), andNational Association of Securities Dealers Automated Operations(NASDAQ).

The performance index of an embodiment excludes transaction costs.

The performance index of an embodiment excludes taxes.

The performance index of an embodiment excludes brokerage commission.

The rank score of an embodiment ranks the investor relative to otherinvestors based upon the investment data.

Generating the rank score of an embodiment comprises generating the rankscore for each investor by combining a skill score, a persistence scoreand a confidence score corresponding to the investor.

The skill score of an embodiment represents an Information Ratio (IR) ofthe investor, wherein the IR represents active return on the investmentposition adjusted for risk.

The skill score of an embodiment represents an investing tenure of theinvestor.

The method of an embodiment comprises generating the skill score,wherein generating the skill score comprises calculating the IR of eachinvestor.

Generating the skill score of an embodiment comprises identifying aminimum IR among the plurality of investors. Generating the skill scoreof an embodiment comprises generating a first interim score for eachinvestor by subtracting the minimum IR from the IR of each investor.

Generating the skill score of an embodiment comprises identifying amaximum first interim score of the plurality of investors. Generatingthe skill score of an embodiment comprises generating a second interimscore for each investor by dividing the first interim score by themaximum first interim score.

Generating the skill score of an embodiment comprises generating a basescore for each investor by multiplying the second interim score by 100.

Generating the skill score of an embodiment comprises generating theskill score for each investor by applying a tenure factor to the basescore.

The tenure factor of an embodiment comprises scales down the base scorefor each investor having an investing tenure equal to or less than two(2) years.

The tenure factor of an embodiment has a value of 1.0 when the investorhas an investing tenure greater than two (2) years.

The tenure factor of an embodiment has a value determined by the formula(0.2+0.7×tenure/1.75) when the investor has an investing tenure equal toor less than two (2) years.

The tenure factor of an embodiment has a value of 0.3 when the investorhas an investing tenure less than three (3) months.

The skill score of an embodiment represents a Sharpe Ratio (SR) and anInformation Ratio (IR) of the investor.

Generating the skill score of an embodiment comprises calculating the SRof each investor.

The SR of an investor of an embodiment comprises an average of an excessmonthly return divided by a standard deviation of the excess monthlyreturn.

Calculating the SR of an investor of an embodiment comprises calculatingan excess monthly return for the investor thr each month of a period.

Calculating the excess monthly return of an embodiment comprisessubtracting a risk-free return from a monthly return.

The period of an embodiment comprises a past N years, wherein N is anynumber greater than zero.

Calculating the SR of an investor of an embodiment comprises calculatingan average of the excess monthly return for the period.

Calculating the SR of an investor of an embodiment comprises calculatinga standard deviation of the excess monthly return for the period.

Calculating the SR of an investor of an embodiment comprises dividingthe average of the excess monthly return by the standard deviation ofthe excess monthly return.

Generating the skill score of an embodiment comprises calculating the IRof each investor.

The IR of an investor of an embodiment comprises an average of aweighted excess active monthly return divided by a standard deviation ofthe weighted excess active monthly return.

Calculating the IR of an investor of an embodiment comprises calculatingan excess active monthly return for the investor for each month of aperiod.

Calculating the excess active monthly return of an embodiment comprisessubtracting a benchmark return from a monthly return.

The method of an embodiment comprises receiving the benchmark returnfrom a benchmark, the benchmark comprising at least one of Standard andPoor's (S&P) 500 (S&P 500), Dow Jones Industrial Average (DJIA), andNational Association of Securities Dealers Automated Operations(NASDAQ).

The period of an embodiment comprises a past N years, wherein N is anynumber greater than zero.

Calculating the SR of an investor of an embodiment comprises calculatinga weighted excess active monthly return by applying a weighting functionto the excess active monthly return for the period.

The weighting function of an embodiment is an exponential function.

The weighting function of an embodiment is at least one of a constant, alinear function, and an exponential function.

Calculating the SR of an investor of an embodiment comprises calculatingan average of un-weighted excess active monthly returns for the period.

Calculating the SR of an investor of an embodiment comprises calculatinga standard deviation of the excess active monthly returns for theperiod.

Calculating the SR of an investor of an embodiment comprises dividingthe weighted excess active monthly return by the standard deviation ofthe excess active monthly returns.

Generating the skill score of an embodiment comprises calculating aFinal Ratio (FR) of each investor representing the IR and the SR of theinvestor.

Calculating the FR of each investor of an embodiment comprisescalculating a weighted average of the IR and the SR.

Generating the skill score of an embodiment comprises normalizing theFR.

Normalizing the FR of an embodiment comprises identifying a minimum FRof the plurality of investors. Normalizing the FR of an embodimentcomprises generating a first interim score for each investor bysubtracting the minimum FR from the FR of each investor.

Normalizing the FR of an embodiment comprises identifying a maximum FRof the plurality of investors. Normalizing the FR of an embodimentcomprises generating a second interim score for each investor bydividing the first interim score by the maximum FR.

Normalizing the FR of an embodiment comprises generating a base skillscore for each investor by multiplying the second interim score by 100.

Generating the skill score of an embodiment comprises generating theskill score for each investor by applying a tenure factor to the baseskill score.

The tenure factor of an embodiment has a value of 1.0 when the investorhas an investing tenure greater than two (2) years.

The tenure factor of an embodiment has a value of 0.3 when the investorhas an investing tenure less than three (3) months.

The method of an embodiment comprises generating the persistence score,wherein the persistence score represents skill of the investor relativeto a benchmark.

Generating the persistence score of an embodiment comprises determininga winning score for each investor as a number of times the investoroutperformed a benchmark. Generating the persistence score of anembodiment comprises calculating a mean for each investor using a numberof trials, wherein the number of trials is a sum of a number of timesthe investor outperformed the benchmark and a number of times theinvestor failed to outperform the benchmark. Generating the persistencescore of an embodiment comprises calculating a standard deviation of thenumber of trials for each investor. Generating the persistence score ofan embodiment comprises calculating a distance from the mean for eachinvestor as a first quantity divided by the standard deviation, whereinthe first quantity is determined by subtracting the mean from thewinning score. Generating the persistence score of an embodimentcomprises generating a delta score for each investor by exponentiatingthe distance.

Generating the persistence score of an embodiment comprises identifyinga minimum delta score among the delta scores of the plurality ofinvestors. Generating the persistence score of an embodiment comprisesgenerating a third interim score for each investor by subtracting theminimum delta score from the delta score of each investor. Generatingthe persistence score of an embodiment comprises identifying a maximumthird interim score of the plurality of investors. Generating thepersistence score of an embodiment comprises generating a fourth interimscore for each investor by dividing the third interim score of eachinvestor by the maximum third interim score. Generating the persistencescore of an embodiment comprises generating the persistence score foreach investor by multiplying the fourth interim score by 100.

The method of an embodiment comprises generating the confidence score,wherein the confidence score represents an investment win percentagerelative to an investment loss percentage.

Generating the confidence score of an embodiment comprises calculating aweighted average win percentage for a portfolio of each investor.Generating the confidence score of an embodiment comprises calculating aweighted average loss percentage for a portfolio of each investor.Generating the confidence score of an embodiment comprises generatingthe confidence score as a ratio of the weighted average win percentageto the weighted average loss percentage.

Calculating the weighted average win percentage of an embodimentcomprises calculating a first quantity by multiplying a percentage ofthe investment position in the portfolio and a percentage gain for theinvestment position, wherein the first quantity is calculated for eachperiod of time of a plurality of periods of time for which theinvestment position outperformed a benchmark. Calculating the weightedaverage win percentage of an embodiment comprises calculating a secondquantity by summing each first quantity for all periods of time of theplurality of periods of time for which the investment positionoutperformed the benchmark. Calculating the weighted average winpercentage of an embodiment comprises calculating the weighted averagewin percentage by dividing the second quantity by a total number ofinvestment positions that outperformed the benchmark.

Calculating the weighted average loss percentage of an embodimentcomprises calculating a third quantity by multiplying a percentage ofthe investment position in the portfolio and a percentage loss for theinvestment position, wherein the third quantity is calculated for eachperiod of time of a plurality of periods of time for which theinvestment position underperformed a benchmark. Calculating the weightedaverage loss percentage of an embodiment comprises calculating a fourthquantity by summing each third quantity for all periods of time of theplurality of periods of time for which the investment positionunderperformed the benchmark. Calculating the weighted average losspercentage of an embodiment comprises calculating the weighted averageloss percentage by dividing the third quantity by a total number ofinvestment positions that underperformed the benchmark.

The method of an embodiment comprises establishing a portfolio value forthe portfolio at a time when the investment position is entered. Themethod of an embodiment comprises using the portfolio value to establishthe percentage gain and the percentage loss.

The method of an embodiment comprises generating the confidence scorefor each trade during each period of time of a plurality of periods oftime.

The method of an embodiment comprises normalizing the confidence scoresuch that the confidence score is in a range of zero (0) to 100.

The confidence score of an embodiment represents for each investor amagnitude of outperforming a benchmark when the investment positionoutperforms relative to a magnitude of failing to outperform thebenchmark when the investment position underperforms.

Generating the rank score of an embodiment comprises generating aweighted average of the skill score, the persistence score and theconfidence score.

Generating the rank score of an embodiment comprises forming a skillcomponent by multiplying the skill score by a first weight. Generatingthe rank score of an embodiment comprises forming a persistencecomponent by multiplying the persistence score by a second weight.Generating the rank score of an embodiment comprises forming aconfidence component by multiplying the confidence score by a thirdweight. Generating the rank score of an embodiment comprises calculatingthe rank score by summing the skill component, the persistence componentand the confidence component.

A sum of the first weight, the second weight and the third weight of anembodiment equals one (1).

The method of an embodiment comprises classifying each investor by therank score of the investor.

The method of an embodiment comprises receiving investment data of atleast one of each investor and the investment position.

The investment data of an embodiment includes historical data andreal-time data.

The real-time data of an embodiment comprises trade data of theinvestment position.

The investment position of an embodiment includes at least one of asecurity, a mutual fund, and an ETF.

Embodiments described herein include a method for generating aperformance index, the method using a processor-based investment system.The method of an embodiment comprises generating a rank score for eachinvestor relative to a plurality of investors of which the investor is amember, the rank score comprising at least one of a skill score, apersistence score and a confidence score of the investor. The method ofan embodiment comprises selecting a set of investors from the pluralityof investors based on the rank score. The method of an embodimentcomprises generating the performance index to provide a measure ofperformance of investors over time relative to a market index, thegenerating of the performance index comprising generating a compositeportfolio comprising investment positions of each portfolio of eachinvestor of the set of investors.

Embodiments described herein include a system comprising: a processor; aranking component executing under the processor, the ranking componentgenerating a rank score for each investor relative to a plurality ofinvestors of which the investor is a member, the generating of the rankscore using investment data of a portfolio of the investor, wherein theportfolio comprises at least one investment position; a performanceindex component executing under the processor, the performance indexcomponent selecting a set of investors from the plurality of investors,the selecting based on the rank score of each investor of the pluralityof investors, the performance index component generating the performanceindex to provide a measure of performance of top individual investorsover time relative to a market index, the generating of the performanceindex comprising generating a composite portfolio comprising investmentpositions of each portfolio of each investor of the set of investors.

Generating of the performance index of an embodiment comprisesdetermining a portfolio weight for the portfolio of each investor,wherein the portfolio weight is relative to other investors of the setof investors.

Generating of the performance index of an embodiment comprisesdetermining an investment weight of each investment position in theportfolio of each investor, wherein the investment weight is relative toother investment positions in the portfolio.

Generating of the performance index of an embodiment comprisesdetermining a weight of each investment position in the performanceindex.

Determining of the weight of each investment position in the performanceindex of an embodiment comprises forming a first quantity for eachinvestment position in a portfolio of an investor by multiplying theportfolio weight of the portfolio by the investment weight of theinvestment position.

Determining of the weight of each investment position in the performanceindex of an embodiment comprises summing across the portfolios of theset of investors the first quantity for all like investment positions.

The performance index component of an embodiment periodically updates acomposition of the performance index.

The periodically updating of an embodiment comprises accounting forchanges to at least one of the portfolios and the set of investors.

The periodically updating of an embodiment comprises accounting forchanges to at least one of contents of the portfolio of each investor ofthe set of investors and accounting for changes to investors in the setof investors.

The rank score of an embodiment ranks the investor relative to otherinvestors based upon the investment data, wherein generating the rankscore comprises generating the rank score for each investor by combininga skill score, a persistence score and a confidence score correspondingto the investor.

The skill score of an embodiment represents an Information Ratio (IR) ofthe investor, wherein the IR represents active return on the investmentposition adjusted for risk.

The skill score of an embodiment represents a Sharpe Ratio (SR) and anInformation Ratio (IR) of the investor.

The system of an embodiment comprises generating the skill score,wherein generating the skill score comprises calculating the SR of eachinvestor, wherein the SR of an investor comprises an average of anexcess monthly return divided by a standard deviation of the excessmonthly return.

Generating the skill score of an embodiment comprises calculating the IRof each investor, wherein the IR of an investor comprises an average ofa weighted excess active monthly return divided by a standard deviationof the weighted excess active monthly return.

Generating the skill score of an embodiment comprises calculating aFinal Ratio (FR) of each investor representing the IR and the SR of theinvestor, wherein calculating the FR of each investor comprisescalculating a weighted average of the IR and the SR, wherein generatingthe skill score comprises normalizing the FR.

The system of an embodiment comprises generating the persistence score,wherein the persistence score represents skill of the investor relativeto a benchmark.

Generating the persistence score of an embodiment comprises determininga winning score for each investor as a number of times the investoroutperformed a benchmark. Generating the persistence score of anembodiment comprises calculating a mean for each investor using a numberof trials, wherein the number of trials is a sum of a number of timesthe investor outperformed the benchmark and a number of times theinvestor failed to outperform the benchmark. Generating the persistencescore of an embodiment comprises calculating a standard deviation of thenumber of trials for each investor. Generating the persistence score ofan embodiment comprises calculating a distance from the mean for eachinvestor as a first quantity divided by the standard deviation, whereinthe first quantity is determined by subtracting the mean from thewinning score. Generating the persistence score of an embodimentcomprises generating a delta score for each investor by exponentiatingthe distance.

Generating the persistence score of an embodiment comprises identifyinga minimum delta score among the delta scores of the plurality ofinvestors. Generating the persistence score of an embodiment comprisesgenerating a third interim score for each investor by subtracting theminimum delta score from the delta score of each investor. Generatingthe persistence score of an embodiment comprises identifying a maximumthird interim score of the plurality of investors. Generating thepersistence score of an embodiment comprises generating a fourth interimscore for each investor by dividing the third interim score of eachinvestor by the maximum third interim score. Generating the persistencescore of an embodiment comprises generating the persistence score foreach investor by multiplying the fourth interim score by 100.

The system of an embodiment comprises generating the confidence score,wherein the confidence score represents an investment win percentagerelative to an investment loss percentage.

Generating the confidence score of an embodiment comprises calculating aweighted average win percentage for a portfolio of each investor.Generating the confidence score of an embodiment comprises calculating aweighted average loss percentage for a portfolio of each investor.Generating the confidence score of an embodiment comprises generatingthe confidence score as a ratio of the weighted average win percentageto the weighted average loss percentage.

Calculating the weighted average win percentage of an embodimentcomprises calculating a first quantity by multiplying a percentage ofthe investment position in the portfolio and a percentage gain for theinvestment position, wherein the first quantity is calculated for eachperiod of time of a plurality of periods of time for which theinvestment position outperformed a benchmark. Calculating the weightedaverage win percentage of an embodiment comprises calculating a secondquantity by summing each first quantity for all periods of time of theplurality of periods of time for which the investment positionoutperformed the benchmark. Calculating the weighted average winpercentage of an embodiment comprises calculating the weighted averagewin percentage by dividing the second quantity by a total number ofinvestment positions that outperformed the benchmark.

Calculating the weighted average loss percentage of an embodimentcomprises calculating a third quantity by multiplying a percentage ofthe investment position in the portfolio and a percentage loss for theinvestment position, wherein the third quantity is calculated for eachperiod of time of a plurality of periods of time for which theinvestment position underperformed a benchmark. Calculating the weightedaverage loss percentage of an embodiment comprises calculating a fourthquantity by summing each third quantity for all periods of time of theplurality of periods of time for which the investment positionunderperformed the benchmark. Calculating the weighted average losspercentage of an embodiment comprises calculating the weighted averageloss percentage by dividing the third quantity by a total number ofinvestment positions that underperformed the benchmark.

The system of an embodiment comprises establishing a portfolio value forthe portfolio at a time when the investment position is entered. Thesystem of an embodiment comprises using the portfolio value to establishthe percentage gain and the percentage loss.

The system of an embodiment comprises generating the confidence scorefor each trade during each period of time of a plurality of periods oftime.

Generating the rank score of an embodiment comprises generating aweighted average of the skill score, the persistence score and theconfidence score.

Generating the rank score of an embodiment comprises forming a skillcomponent by multiplying the skill score by a first weight. Generatingthe rank score of an embodiment comprises forming a persistencecomponent by multiplying the persistence score by a second weight.Generating the rank score of an embodiment comprises forming aconfidence component by multiplying the confidence score by a thirdweight. Generating the rank score of an embodiment comprises calculatingthe rank score by summing the skill component, the persistence componentand the confidence component.

The system of an embodiment comprises classifying each investor by therank score of the investor.

The system of an embodiment comprises receiving investment data of atleast one of each investor and the investment position, wherein theinvestment data includes historical data and real-time data, wherein thereal-time data comprises trade data of the investment position.

Embodiments described herein include a method comprising forming anelectronic network between a plurality of investors, wherein theelectronic network includes a coupling to portfolios and onlinebrokerage accounts of the plurality of investors. The method of anembodiment comprises sharing between the plurality of investors via theelectronic network at least one of investment data and brokerage data,wherein the investment data comprises data of the portfolios, wherein aportfolio comprises at least one investment position, wherein thebrokerage data comprises data of the brokerage accounts. The method ofan embodiment comprises executing a first action involving an investmentposition in at least one of a first portfolio and a first brokerageaccount of a first investor of the plurality of investors, wherein theexecuting is in response to the at least one of the investment data andbrokerage data indicating a second action taken in at least one of asecond portfolio and a second brokerage account of at least one secondinvestor of the plurality of investors.

Executing of the first action of an embodiment comprises receiving anauto notification of the second action taken in the second portfolio.

Executing of the first action of an embodiment comprises, in response tothe notification, presenting an action option to the first investor oftaking the first action in the first portfolio.

Executing of the first action of an embodiment comprises, in response tothe notification, presenting an action option to the first investor oftaking the first action in the first brokerage account.

Executing of the first action of an embodiment comprises, in response tothe notification, automatically taking the first action in the firstportfolio.

Executing of the first action of an embodiment comprises, in response tothe notification, automatically taking the first action in the firstbrokerage account.

The second action of an embodiment involves a second investment positionthat is equivalent to the first investment position.

The second action of an embodiment involves a second investment positionthat is identical to the first investment position.

The first action of an embodiment is equivalent to the second action.

The first action of an embodiment is different than the second action.

The first action of an embodiment is proportional to the second action.

The first action of an embodiment is a trade involving the investmentposition.

The executing of an embodiment comprises automatically issuing a commandto a broker to initiate authentication of the trade, wherein the brokercontrols the brokerage account.

The executing of an embodiment comprises automatically issuing a commandto execute the trade.

The executing of an embodiment comprises periodically issuing a commandto check status of the trade.

The executing of an embodiment comprises automatically issuing anotification message to the investor upon completion of the trade.

The executing of an embodiment comprises automatically issuing a statusmessage to the investor advising of status of the trade.

The first action of an embodiment is a transaction option, wherein thetransaction option includes at least one of a buy option and a selloption corresponding to an investment position.

The first action of an embodiment is a transaction recommendation,wherein the transaction recommendation includes at least one of a buyrecommendation and a sell recommendation corresponding to an investmentposition.

The second action of an embodiment is change in a rating of theinvestment position.

The second action of an embodiment is a change in value of theinvestment position.

The second action of an embodiment is a trade involving the investmentposition.

The method of an embodiment comprises aggregating the investment data ofthe portfolios and the online brokerage accounts.

The method of an embodiment comprises aggregating the investment data ofthe portfolios.

The method of an embodiment comprises aggregating the investment data toinclude data of the online brokerage accounts.

The method of an embodiment comprises ranking each investor relative toevery other investor of the plurality of investors using a rank score,the ranking according to investment performance derived from theinvestment data.

The rank score of an embodiment ranks the investor relative to otherinvestors based upon the investment data, wherein generating the rankscore comprises generating the rank score for each investor by combininga skill score, a persistence score and a confidence score correspondingto the investor.

The skill score of an embodiment represents a Sharpe Ratio (SR) and anInformation Ratio (IR) of the investor.

The method of an embodiment comprises generating the skill score,wherein generating the skill score comprises calculating the SR of eachinvestor, wherein the SR of an investor comprises an average of anexcess monthly return divided by a standard deviation of the excessmonthly return.

Generating the skill score of an embodiment comprises calculating the IRof each investor, wherein the IR of an investor comprises an average ofa weighted excess active monthly return divided by a standard deviationof the weighted excess active monthly return.

Generating the skill score of an embodiment comprises calculating aFinal Ratio (FR) of each investor representing the IR and the SR of theinvestor, wherein calculating the FR of each investor comprisescalculating a weighted average of the IR and the SR, wherein generatingthe skill score comprises normalizing the FR.

The method of an embodiment comprises generating the persistence score,wherein the persistence score represents skill of the investor relativeto a benchmark.

Generating the persistence score of an embodiment comprises determininga winning score for each investor as a number of times the investoroutperformed a benchmark. Generating the persistence score of anembodiment comprises calculating a mean for each investor using a numberof trials, wherein the number of trials is a sum of a number of timesthe investor outperformed the benchmark and a number of times theinvestor failed to outperform the benchmark. Generating the persistencescore of an embodiment comprises calculating a standard deviation of thenumber of trials for each investor. Generating the persistence score ofan embodiment comprises calculating a distance from the mean for eachinvestor as a first quantity divided by the standard deviation, whereinthe first quantity is determined by subtracting the mean from thewinning score. Generating the persistence score of an embodimentcomprises generating a delta score for each investor by exponentiatingthe distance.

Generating the persistence score of an embodiment comprises identifyinga minimum delta score among the delta scores of the plurality ofinvestors. Generating the persistence score of an embodiment comprisesgenerating a third interim score for each investor by subtracting theminimum delta score from the delta score of each investor. Generatingthe persistence score of an embodiment comprises identifying a maximumthird interim score of the plurality of investors. Generating thepersistence score of an embodiment comprises generating a fourth interimscore for each investor by dividing the third interim score of eachinvestor by the maximum third interim score. Generating the persistencescore of an embodiment comprises generating the persistence score foreach investor by multiplying the fourth interim score by 100.

The method of an embodiment comprises generating the confidence score,wherein the confidence score represents an investment win percentagerelative to an investment loss percentage.

Generating the confidence score of an embodiment comprises calculating aweighted average win percentage for a portfolio of each investor.Generating the confidence score of an embodiment comprises calculating aweighted average loss percentage for a portfolio of each investor.Generating the confidence score of an embodiment comprises generatingthe confidence score as a ratio of the weighted average win percentageto the weighted average loss percentage.

Calculating the weighted average win percentage of an embodimentcomprises calculating a first quantity by multiplying a percentage ofthe investment position in the portfolio and a percentage gain for theinvestment position, wherein the first quantity is calculated for eachperiod of time of a plurality of periods of time for which theinvestment position outperformed a benchmark. Calculating the weightedaverage win percentage of an embodiment comprises calculating a secondquantity by summing each first quantity for all periods of time of theplurality of periods of time for which the investment positionoutperformed the benchmark. Calculating the weighted average winpercentage of an embodiment comprises calculating the weighted averagewin percentage by dividing the second quantity by a total number ofinvestment positions that outperformed the benchmark.

Calculating the weighted average loss percentage of an embodimentcomprises calculating a third quantity by multiplying a percentage ofthe investment position in the portfolio and a percentage loss for theinvestment position, wherein the third quantity is calculated for eachperiod of time of a plurality of periods of time for which theinvestment position underperformed a benchmark. Calculating the weightedaverage loss percentage of an embodiment comprises calculating a fourthquantity by summing each third quantity for all periods of time of theplurality of periods of time for which the investment positionunderperformed the benchmark. Calculating the weighted average losspercentage of an embodiment comprises calculating the weighted averageloss percentage by dividing the third quantity by a total number ofinvestment positions that underperformed the benchmark.

The method of an embodiment comprises establishing a portfolio value forthe portfolio at a time when the investment position is entered. Themethod of an embodiment comprises using the portfolio value to establishthe percentage gain and the percentage loss.

The method of an embodiment comprises generating the confidence scorefor each trade during each period of time of a plurality of periods oftime.

Generating the rank score of an embodiment comprises generating aweighted average of the skill score, the persistence score and theconfidence score.

Generating the rank score of an embodiment comprises forming a skillcomponent by multiplying the skill score by a first weight. Generatingthe rank score of an embodiment comprises forming a persistencecomponent by multiplying the persistence score by a second weight.Generating the rank score of an embodiment comprises forming aconfidence component by multiplying the confidence score by a thirdweight. Generating the rank score of an embodiment comprises calculatingthe rank score by summing the skill component, the persistence componentand the confidence component.

The method of an embodiment comprises generating security ratings forsecurities held by the plurality of investors using the ranking and theinvestment data.

Generating the security ratings of an embodiment comprises identifying aset of investors corresponding to each investment position of aplurality of investment positions, wherein each investor of the set ofinvestors owns the investment position. Generating the security ratingsof an embodiment comprises for each set of investors, generating therank score for each investor, the rank score categorizing the investorsfor a time period of a plurality of time periods. Generating thesecurity ratings of an embodiment comprises for each set of investors,generating an average rank score for the period of time. Generating thesecurity ratings of an embodiment comprises for each set of investors,generating a trailing rank score by averaging the rank scores across theplurality of periods of time. Generating the security ratings of anembodiment comprises generating a stock rating score for each investmentposition by combining the average rank score and the trailing rank scoreof the set of investors corresponding to the investment position.

The first action of an embodiment comprises generating customizedrecommendations corresponding to the investment position in the at leastone of the first portfolio and the first brokerage account of the firstinvestor, the customized recommendations considering at least one ofinvestment performance derived from the investment data, the rankings,and the security ratings.

The investment data of an embodiment comprises data of currentinvestment holdings, historical investment holdings, historicalinvestment performance data, historical transactional data, and watchlists.

Embodiments described herein include a method comprising electronicallylinking an investment platform to a plurality of investors, a pluralityof brokerage accounts of the plurality of investors, and a plurality ofportfolios of the plurality of investors, wherein a portfolio comprisesat least one investment position. The method of an embodiment comprisessharing between the plurality of investors via the investment platformat least one of portfolio data of the plurality of portfolios andbrokerage data of the plurality of brokerage accounts. The method of anembodiment comprises automatically conducting operations involving atleast one of the plurality of portfolios and the plurality of brokerageaccounts in response to at least one of the portfolio data and thebrokerage data.

Embodiments described herein include a method comprising electronicallylinking an investment platform to a plurality of investors, a pluralityof brokerage accounts of the plurality of investors, and a plurality ofportfolios of the plurality of investors, wherein a portfolio comprisesat least one investment position. The method of an embodiment comprisessharing between the plurality of investors via the investment platformat least one of portfolio data of the plurality of portfolios andbrokerage data of the plurality of brokerage accounts. The method of anembodiment comprises automatically conducting operations in at least oneof the plurality of portfolios and the plurality of brokerage accountsin response to at least one of the portfolio data and the brokeragedata.

Embodiments described herein include an investment system comprising aprocessor and a plurality of couplings between the processor and aplurality of investors, a plurality of brokerage accounts of theplurality of investors, and a plurality of portfolios of the pluralityof investors, wherein a portfolio comprises at least one investmentposition, the processor sharing at least one of portfolio data of theplurality of portfolios and brokerage data of the plurality of brokerageaccounts among the plurality of investors the processor automaticallyconducting operations involving at least one of the plurality ofportfolios and the plurality of brokerage accounts in response to atleast one of the portfolio data and the brokerage data.

Embodiments described herein include a system comprising a processorcoupled to a trading application programming interface (API), whereinthe trading API is coupled to portfolios and online brokerage accountsof a plurality of investors, the processor sharing between the pluralityof investors via the electronic network at least one of investment dataand brokerage data, wherein the investment data comprises data of theportfolios, wherein a portfolio comprises at least one investmentposition, wherein the brokerage data comprises data of the brokerageaccounts, the trading API executing a first action involving aninvestment position in at least one of a first portfolio and a firstbrokerage account of a first investor of the plurality of investors,wherein the executing is in response to the at least one of theinvestment data and brokerage data indicating a second action taken inat least one of a second portfolio and a second brokerage account of atleast one second investor of the plurality of investors. The trading APIexecuting the first action of an embodiment comprises receiving anautomatic notification of the second action taken in the secondportfolio.

The trading API executing the first action of an embodiment comprises,in response to the notification, presenting an action option to thefirst investor of taking the first action in the first portfolio.

The trading API executing the first action of an embodiment comprises,in response to the notification, presenting an action option to thefirst investor of taking the first action in the first brokerageaccount.

The trading API executing the first action of an embodiment comprises,in response to the notification, automatically taking the first actionin the first portfolio.

The trading API executing the first action of an embodiment comprises,in response to the notification, automatically taking the first actionin the first brokerage account.

The second action of an embodiment involves a second investment positionthat is equivalent to the first investment position.

The second action of an embodiment involves a second investment positionthat is identical to the first investment position.

The first action of an embodiment is equivalent to the second action.

The first action of an embodiment is different than the second action.

The first action of an embodiment is proportional to the second action.

The first action of an embodiment is a trade involving the investmentposition.

The executing of an embodiment comprises automatically issuing a commandto a broker to initiate authentication of the trade, wherein the brokercontrols the brokerage account.

The executing of an embodiment comprises automatically issuing a commandto execute the trade.

The executing of an embodiment comprises periodically issuing a commandto check status of the trade.

The executing of an embodiment comprises automatically issuing anotification message to the investor upon completion of the trade.

The executing of an embodiment comprises automatically issuing a statusmessage to the investor advising of status of the trade.

The first action of an embodiment is a transaction option, wherein thetransaction option includes at least one of a buy option and a selloption corresponding to an investment position.

The first action of an embodiment is a transaction recommendation,wherein the transaction recommendation includes at least one of a buyrecommendation and a sell recommendation corresponding to an investmentposition.

The second action of an embodiment is change in a rating of theinvestment position.

The second action of an embodiment is a change in value of theinvestment position.

The second action of an embodiment is a trade involving the investmentposition.

The processor of an embodiment aggregates the investment data of theportfolios and the online brokerage accounts.

The processor of an embodiment aggregates the investment data of theportfolios.

The processor of an embodiment aggregates the investment data to includedata of the online brokerage accounts.

Aspects of the IDSS described herein may be implemented as functionalityprogrammed into any, of a variety of circuitry, including programmablelogic devices (PLDs), such as field programmable gate arrays (FPGAs),programmable array logic (PAL) devices, electrically programmable logicand memory devices and standard cell-based devices, as well asapplication specific integrated circuits (ASICs). Some otherpossibilities for implementing aspects of the IDSS include:microcontrollers with memory (such as electronically erasableprogrammable read only memory (EEPROM)), embedded microprocessors,firmware, software, etc. Furthermore, aspects of the IDSS may beembodied in microprocessors having software-based circuit emulation,discrete logic (sequential and combinatorial), custom devices, fuzzy(neural) logic, quantum devices, and hybrids of any of the above devicetypes. Of course the underlying device technologies may be provided in avariety of component types, e.g., metal-oxide semiconductor field-effecttransistor (MOSFET) technologies like complementary metal-oxidesemiconductor (CMOS), bipolar technologies like emitter-coupled logic(ECL), polymer technologies (e.g., silicon-conjugated polymer andmetal-conjugated polymer-metal structures), mixed analog and digital,etc.

It should be noted that any system, method, and/or other componentsdisclosed herein may be described using computer aided design tools andexpressed (or represented), as data and/or instructions embodied invarious computer-readable media, in terms of their behavioral, registertransfer, logic component, transistor, layout geometries, and/or othercharacteristics. Computer-readable media in which such formatted dataand/or instructions may be embodied include, but are not limited to,non-volatile storage media in various forms (e.g., optical, magnetic orsemiconductor storage media) and carrier waves that may be used totransfer such formatted data and/or instructions through wireless,optical, or wired signaling media or any combination thereof. Examplesof transfers of such formatted data and/or instructions by carrier wavesinclude, but are not limited to, transfers (uploads, downloads, e-mail,etc.) over the Internet and/or other computer networks via one or moredata transfer protocols (e.g., HTTP, FTP, SMTP, etc.). When receivedwithin a computer system via one or more computer-readable media, suchdata and/or instruction-based expressions of the above describedcomponents may be processed by a processing entity (e.g., one or moreprocessors) within the computer system in conjunction with execution ofone or more other computer programs.

Unless the context clearly requires otherwise, throughout thedescription and the claims, the words “comprise,” “comprising,” and thelike are to be construed in an inclusive sense as opposed to anexclusive or exhaustive sense; that is to say, in a sense of “including,but not limited to.” Words using the singular or plural number alsoinclude the plural or singular number respectively. Additionally, thewords “herein,” “hereunder,” “above,” “below,” and words of similarimport, when used in this application, refer to this application as awhole and not to any particular portions of this application. When theword “or” is used in reference to a list of two or more items, that wordcovers all of the following interpretations of the word: any of theitems in the list, all of the items in the list and any combination ofthe items in the list.

The above description of embodiments of the IDSS is not intended to beexhaustive or to limit the systems and methods to the precise formsdisclosed. While specific embodiments of and examples for, the IDSS aredescribed herein for illustrative purposes, various equivalentmodifications are possible within the scope of the systems and methods,as those skilled in the relevant art will recognize. The teachings ofthe IDSS provided herein can be applied to other systems and methods,not only for the systems and methods described above.

The elements and acts of the various embodiments described above can becombined to provide further embodiments. These and other changes can bemade to the IDSS in light of the above detailed description.

In general, in the following claims, the terms used should not beconstrued to limit the IDSS to the specific embodiments disclosed in thespecification and the claims, but should be construed to include allsystems that operate under the claims. Accordingly, the IDSS is notlimited by the disclosure, but instead the scope of the IDSS is to bedetermined entirely by the claims.

While certain aspects of the IDSS are presented below in certain claimforms, the inventors contemplate the various aspects of the IDSS in anynumber of claim forms. Accordingly, the inventors reserve the right toadd additional claims after filing the application to pursue suchadditional claim forms for other aspects of the IDSS.

1.-107. (canceled)
 108. A method, comprising: generating, using one ormore processors and for a plurality of investors, a rank score for eachinvestor relative to the other investors based on each investor'sportfolio; determining, using the one or more processors, a portfolioweight for each portfolio of a subset of the plurality of investors,wherein each portfolio weight is proportional to the rank score of thecorresponding investor; generating, using the one or more processors, acomposite portfolio comprising investment positions of the portfolios ofthe subset of the plurality of investors, the investment positionsweighted by the corresponding portfolio weight; generating, using theone or more processors, a performance index based on the performance ofthe composite portfolio over time.
 109. The method of claim 108, whereinthe investment positions are also weighted by an investment weight, theinvestment weight relative to the other investment positions in thecorresponding investor's portfolio.
 110. The method of claim 109,further comprising forming a first quantity for each investment positionin a portfolio of an investor by multiplying the portfolio weight of theportfolio by the investment weight of the investment position.
 111. Themethod of claim 110, wherein generating the performance index comprisessumming each first quantity for all like investment positions across thesubset of the plurality of investors.
 112. The method of claim 108,wherein generating the rank score comprises generating the rank scorefor each investor by combining a skill score, a persistence score and aconfidence score corresponding to the investor.
 113. The method of claim112, wherein the skill score represents an information Ratio (IR) of theinvestor, wherein the IR represents active return on the investmentposition adjusted for risk.
 114. The method of claim 112, wherein theskill score represents an investing tenure of the investor.
 115. Themethod of claim 112, wherein the persistence score represents skill ofthe investor relative to a benchmark.
 116. The method of claim 115,wherein generating the persistence score comprises: determining awinning score or each investor as a number of times the investoroutperformed a benchmark; calculating a mean for each investor using anumber of trials, wherein the number of trials is a sum of a number oftimes the investor outperformed the benchmark and a number of times theinvestor failed to outperform the benchmark; calculating a standarddeviation of the number of trials for each investor; calculating adistance from the mean for each investor as a first quantity divided bythe standard deviation, wherein the first quantity is determined bysubtracting the mean from the winning score; and generating a deltascore for each investor by exponentiating the distance.
 117. The methodof claim 116, wherein generating the persistence score comprises:identifying a minimum delta score among the delta scores of theplurality of investors; generating a third interim score for eachinvestor by subtracting the minimum delta score from the delta score ofeach investor; identifying a maximum third interim score of theplurality of investors; generating a fourth interim score for eachinvestor by dividing the third interim score of each investor by themaximum third interim score; and generating the persistence score foreach investor by multiplying the fourth interim score by
 100. 118. Themethod of claim 112, comprising generating the confidence score, whereinthe confidence score represents an investment win percentage relative toan investment loss percentage.
 119. The method of claim 118, whereingenerating the confidence score comprises: calculating a weightedaverage win percentage for a portfolio of each investor; calculating aweighted average loss percentage for a portfolio of each investor;generating the confidence score as a ratio of the weighted average winpercentage to the weighted average loss percentage.
 120. The method ofclaim 119, wherein calculating the weighted average win percentagecomprises: calculating a first quantity by multiplying a percentage ofthe investment position in the portfolio and a percentage gain for theinvestment position, wherein the first quantity is calculated for eachperiod of time of a plurality of periods of time for which theinvestment position outperformed a benchmark; calculating a secondquantity by summing each first quantity for all periods of time of theplurality of periods of time for which the investment positionoutperformed the benchmark; calculating the weighted average winpercentage by dividing the second quantity by a total number ofinvestment positions that outperformed the benchmark.
 121. The method ofclaim 119, wherein calculating the weighted average loss percentagecomprises: calculating a third quantity by multiplying a percentage ofthe investment position in the portfolio and a percentage loss for theinvestment position, wherein the third quantity is calculated for eachperiod of time of a plurality of periods of time for which theinvestment position underperformed a benchmark; calculating a fourthquantity by summing each third quantity for all periods of time of theplurality of periods of time for which the investment positionunderperformed the benchmark; calculating the weighted average losspercentage by dividing the third quantity by a total number ofinvestment positions that underperformed the benchmark.
 122. The methodof claim 112, wherein the confidence score represents for each investora magnitude of outperforming a benchmark when the investment positionoutperforms relative to a magnitude of failing to outperform thebenchmark when the investment position underperforms.
 123. Anon-transitory computer-readable storage device comprising instructionsthat, when executed, cause one or more processors to: generate, for aplurality of investors, a rank score for each investor relative to theother investors based on each investor's portfolio; determine aportfolio weight for each portfolio of a subset of the plurality ofinvestors, wherein each portfolio weight is proportional to the rankscore of the corresponding investor; generate a composite portfoliocomprising investment positions of the portfolios of the subset of theplurality of investors, the investment positions weighted by thecorresponding portfolio weight; generate a performance index based onthe performance of the composite portfolio over time.
 124. The device ofclaim 123, wherein the investment positions are also weighted by aninvestment weight, the investment weight relative to the otherinvestment positions in the corresponding investor's portfolio.
 125. Thedevice of claim 124, the one or more processors further caused to form afirst quantity for each investment position in a portfolio of aninvestor by multiplying the portfolio weight of the portfolio by theinvestment weight of the investment position.
 126. A system, comprising:one or more processors; a memory coupled to the processor; the memorycomprising executable instructions that, when executed, cause the one ormore processors to: generate, for a plurality of investors, a rank scorefor each investor relative to the other investors based on eachinvestor's portfolio; determine a portfolio weight for each portfolio ofa subset of the plurality of investors, wherein each portfolio weight isproportional to the rank score of the corresponding investor; generate acomposite portfolio comprising investment positions of the portfolios ofthe subset of the plurality of investors, the investment positionsweighted by the corresponding portfolio weight; generate a performanceindex based on the performance of the composite portfolio over time.127. The system of claim 126, wherein the investment positions are alsoweighted by an investment weight, the investment weight relative to theother investment positions in the corresponding investor's portfolio.